3 top Democratic lawmakers are calling for an investigation into a major student-loan company, accusing it of 'loan forgiveness mismanagement' for millions of borrowers

Senate Majority Leader Chuck Schumer of New York. AP Photo/J. Scott Applewhite

• Sens. Elizabeth Warren, Chuck Schumer, and Bernie Sanders called for an investigation into student-loan company MOHELA.
• They accused the company of mismanaging debt relief for public servants.
• The Education Department has previously withheld pay from all federal servicers for not meeting some of their obligations.

Three top Democratic lawmakers want federal and state officials to investigate a major student-loan company.

On Wednesday, Senate Majority Leader Chuck Schumer, along with Sens. Elizabeth Warren and Bernie Sanders, released a statement calling on the Consumer Financial Protection Bureau and state attorneys general to investigate “student loan forgiveness mismanagement” by MOHELA, the federal servicer based in Missouri that manages the Public Service Loan Forgiveness portfolio.

The statement followed a Wednesday report from advocacy group Student Borrower Protection Center and the American Federation of Teachers, which contained internal documents obtained via Missouri’s Sunshine Law. The documents revealed internal communications from MOHELA regarding its return to repayment playbook, along with how it advises its customer service representatives to communicate with borrowers.

The playbook included “call deflection” strategies that made it difficult for borrowers with questions to get ahold of a representative. In their statement, the lawmakers said they’re joining the advocacy groups in “expressing outrage at MOHELA’s mismanagement of their student loan portfolio that resulted in denied services to millions of hard working borrowers.”

They called on the CFPB and attorneys general to “investigate MOHELA and pursue action to the fullest extent possible under the law. Our nation’s public servants, members of the military, and first responders deserve far, far better.”

MOHELA did not return Business Insider’s request for comment.

Since student-loan payments resumed in October after an over three-year pause, federal servicers have been under scrutiny over their handling of the return to repayment.

The Education Department announced in October it would be withholding over $7 million in pay from MOHELA over failure to get on-time billing statements out to borrowers after borrowers began to encounter a host of issues with their bills, including inaccurate monthly statements and improper forbearance statuses.

In January, the Education Department withheld varying amounts of pay from the other three federal servicers for the same reason.

Still, some lawmakers have been calling for additional oversight. In November, Warren joined three of her Democratic colleagues in sending a letter to MOHELA’s CEO over a lack of clarity surrounding its billing communications to borrowers.

The Education Department has previously vowed to maintain oversight over federal servicers, releasing an accountability framework late last year that includes actions it could take if a servicer fails its contractual obligations, like transferring a borrower to a better-performing servicer.

The CFPB has not yet commented on whether it will pursue an investigation into the company.