A major student loan company is once again in the spotlight for providing inaccurate information to borrowers.
A group of Democratic lawmakers, including Senators Elizabeth Warren, Jeff Merkley and Ed Markey, are seeking information from student loan servicer MOHELA after it sent borrowers incorrect overdue noticesby telling them they were approaching bankruptcy when they were not.
The lawmakers requested MOHELA to clarify the extent of the error, including how many borrowers received delinquency notices, how the error occurred and how long it took for the servicer to notify borrowers of the error.
A spokesperson for the Department of Education previously confirmed to Business Insider that the department was aware of an issue involving “a small number of borrowers with one servicer,” and that affected borrowers would be notified of the error by email.
However, some borrowers said they did not receive correction emails and their credit scores dropped after the error. The lawmakers wrote that the error was “not only deeply troubling for borrowers, but could also have led to direct financial harm.”
“If a borrower does not realize that his false notice was issued in error and believes he is about to default, he could make the payment for which MOHELA claims he is responsible, unnecessarily spending hundreds or even thousands of dollars,” they wrote.
MOHELA has previously been investigated by both lawmakers and the Biden administration for failing to meet its contractual obligations. In 2023 the Education Department $7.2 million in wages were withheld from the servicer for failing to send billing statements on time to 2.5 million borrowers, causing more than 800,000 of them to be classified as delinquent.
Daniela Perez, a MOHELA borrower, received the false notices and said she was “nervous” because she suspected it was a glitchbut did not know whether she would have to make the $10,635 payment her account said was due.
Borrowers have reported a series of other errors, including inaccurate billing statements, after President Donald Trump’s student loan repayment overhaul took effect July 1. Although the Department of Education has said it continues to monitor administrators, a March report from the Government Accountability Office says the department has stopped evaluating administrators for billing accuracy.
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