Education Department Cracks Down on Student Loan Servicers for Billing Errors
The Education Department revealed that a contracted loan servicing company, MOHELA, failed to send timely billing statements to 2.5 million borrowers, causing hundreds of thousands to miss their payments. As a result, the department will withhold $7.2 million of compensation due to MOHELA. Approximately 800,000 borrowers became delinquent on their loans due to the late billing notices. The department has directed MOHELA to place these borrowers in temporary forbearance with 0% interest rates until the billing issues are resolved. The errors are the latest in a series of problems faced by the Biden administration in restarting student loan payments.