February 27, 2025

Warren, Blumenthal, Duckworth Ramp Up Investigation Into MOHELA’s Predatory Website Terms of Use

Lawmakers hit loan servicer for efforts to infringe on borrowers’ legal rights

With Education Department’s future uncertain, MOHELA’s behavior raises concerns about ability to keep student loan servicers in check

“MOHELA has imposed an exploitative set of Terms upon all borrowers that set up an account on its website…(Y)our response indicates a worrying disregard for borrowers’ rights.”

Text of Letter (PDF) | MOHELA Response to November 2024 Letter (PDF)

Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), Tammy Duckworth (D-Ill.), and Richard Blumenthal (D-Conn.) wrote to the student loan servicer Missouri Higher Education Loan Authority (MOHELA) with continued concerns over its website’s Terms of Use (TOU), which appear to be written with the intent to relieve MOHELA of liability for severe misconduct and may infringe upon student loan borrowers’ legal rights.

MOHELA has repeatedly shirked its basic responsibilities as a federal student loan servicer and has been repeatedly penalized by ED for doing so. In November 2024, the Senators wrote to MOHELA to raise their initial concerns about the company’s tactics. The loan servicer’s response evaded questions, failed to provide a reasonable justification for the predatory provisions in its TOU, and made multiple false assertions.

In its response, MOHELA:

Falsely claimed its TOU are in line with industry standards, even though MOHELA appears to have written its TOU to absolve it of much more severe wrongdoing compared to other major federal loan servicers’ TOU;
Provided unconvincing explanations for its TOU provisions disclaiming any responsibility that its website contain “accurate or reliable” information and disclaiming any responsibility for correcting any “defects” on the website; and
Failed to justify exploitative TOU sections that appear to undermine borrowers’ rights to hold MOHELA accountable for financial harms, including by limiting its liability to $100 “for all claims arising” from use of its website and making borrowers’ “sole (legal) remedy” for dissatisfaction with MOHELA’s website to stop using the website.

“MOHELA’s explanations fail to provide persuasive justifications for these provisions…(and the t)erms are clearly written and designed to absolve MOHELA of wide swaths of damages even in the cases of significant wrongdoing,” wrote the senators.

MOHELA’s terms may also violate federal consumer protection law. The Consumer Financial Protection Act (CFPA) prohibits abusive contracts, including those that take “unreasonable advantage” of “unequal bargaining power.” That could apply to MOHELA’s TOU, since borrowers assigned to MOHELA have no choice but to sign the TOU and cannot choose a different loan servicer. MOHELA did not address the senators’ concerns in this area.

The lawmakers urged the loan servicer to remove all predatory provisions from its TOU and asked MOHELA to provide clarity on its decision to impose it on borrowers by March 13, 2025.

Senator Warren has led the fight to reform our higher education system, cancel student loan debt, and hold student loan servicers accountable:

In February 2025, Senators Elizabeth Warren and Andy Kim (D-N.J.) released responses to Committee questions for the record from Donald Trump’s pick for Secretary of Education, Linda McMahon, in which McMahon states that she “wholeheartedly” agrees with Trump’s plans to abolish the Department of Education.
In February 2025, during the Senate’s consideration of the Republican budget resolution, Senators Elizabeth Warren and Ed Markey (D-Mass.) proposed an amendment to protect higher education funding in Massachusetts.
In February 2025, Senators Elizabeth Warren, Jeff Merkley (D-Ore.), Ron Wyden (D-Ore.), and Amy Klobuchar (D-Minn.), led 32 Democratic senators in writing to President Donald Trump, demanding that he reject Congressional Republicans’ legislative plans to increase the cost of living, including education costs, for Americans after pledging to lower costs on “Day One” of his presidency.
In February 2025, in advance of her confirmation hearing, Senators Elizabeth Warren and Andy Kim (D-N.J.), sent Linda McMahon, Secretary-Designate for the U.S. Department of Education, a 12-page letter with 65 questions on her policy views.
In February 2025, following Elon Musk and DOGE forcing their way into the Department of Education, Senator Elizabeth Warren and Minority Leader Schumer (D-N.Y.) led a coalition of Democrats in demanding the Department of Education launch an investigation into Musk and DOGE’s access to federal student loan data.
In January 2025, Senator Elizabeth Warren sent Elon Musk, Chair of the Department of Government Efficiency (DOGE), a letter detailing over 30 proposals that would cut at least $2 trillion of wasteful government spending over the next decade, including through saving on education programs.
In December 2024, Senators Elizabeth Warren, Richard Blumenthal (D-Conn.), Jeff Merkley (D-Ore.), and Ron Wyden (D-Ore.) revealed the alarming findings of a Senate investigation into millions of consumer credit reporting errors that occurred during the transfer of student loan accounts from Nelnet to MOHELA in 2023. The senators urged the CFPB and ED to investigate these errors and use their supervisory and enforcement authority to hold the appropriate parties accountable.
In December 2024, Senator Elizabeth Warren (D-Mass.) and Congresswoman Madeleine Dean (D-PA) led 24 lawmakers in sending a bicameral letter to Consumer Financial Protection Bureau Director Rohit Chopra and Federal Trade Commission Chair Lina Khan, revealing the results of their investigation into Navient regarding its cancellation process for the predatory, for-profit student loans in its portfolio and urging the agencies to hold the student loan servicer accountable for any violations of federal law.
In November 2024, Senators Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), Chris Van Hollen (D-Md.), and Tammy Duckworth (D-Ill.) sent a letter blasting MOHELA for abusing borrowers with potentially illegal, exploitative terms of use.
In October 2024, Senator Elizabeth Warren (D-Mass.) Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.), and Raphael Warnock (D-Ga.) sent a letter to the Department of Justice (DOJ) and Department of Education (ED) commending the agencies on their progress in helping borrowers who are struggling financially to discharge their student loans in bankruptcy and asking them to continue expanding awareness of the Biden-Harris administration’s new policy.
In October 2024, Senator Elizabeth Warren (D-Mass.) celebrated new federal student debt relief, bringing the total number of Americans who have had their debt canceled under the Public Service Loan Forgiveness (PSLF) program during the Biden-Harris Administration to a historic 1 million people and counting.
In September 2024, Senators Warren (D-Mass.) and Merkley (D-Ore.) released a new report examining the impact of the Biden-Harris administration’s new Higher Education Act rule, finding that low- and middle-income borrowers, seniors, women, and Black borrowers will receive enormous benefits from the new rule.
In August 2024, Senator Warren joined Senators Jeff Merkley, Ron Wyden (D-Ore.), and Richard Blumenthal (D-Conn.) to launch an investigation into the reported mishandling of student loan transfers by MOHELA, Nelnet and credit reporting agencies.
In August 2024, Senator Warren (D-Mass.) and Representative Madeleine Dean (D-Pa.) led over 30 lawmakers in a letter urging student loan servicer Navient to reform its flawed process to cancel the private student loans of borrowers who attended fraudulent, for-profit colleges.
In July 2024, Senators Warren, Ron Wyden, Chris Van Hollen, and Bernie Sanders, sent a letter to Secretary of Education Miguel Cardona, cautioning the Department of Education on Federal Student Aid’s transition to the Unified Servicing and Data Solution system.
In July 2024, Senators Warren, Schumer, and Sanders released a joint statement on the American Federation of Teachers’ lawsuit against MOHELA for allegedly overcharging and misleading student loan borrowers.
In May 2024, Senators Warren and King led their colleagues in a letter to Education Secretary Miguel Cardona, urging them to provide guidance and communication to borrowers as the Public Service Loan Forgiveness program transfers from MOHELA to the Department of Education.
In May 2024, Senator Warren led a growing coalition of senators in urging the Department of Education to hold student loan servicer MOHELA accountable for its failures.
In May 2024, Senator Warren and 24 members of the U.S. Senate sent a letter to Senator Tammy Baldwin, Chair of the Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, and Senator Shelley Moore Capito, Ranking Member of the Subcommittee, encouraging them to provide $2.7 billion in funding to the Office of Federal Student Aid (FSA) in fiscal year (FY) 2025.
In May 2024, Senators Warren, Carper, Kaine, and Representative Don Davis (D-N.C.) called on the Department of Defense (DoD) to release data on the Postsecondary Education Complaint System (PECS), a centralized database to track complaints against schools who participate in the Tuition Assistance (TA) and My Career Advancement Account Scholarship (MyCAA) program.
In April 2024, Senator Warren led eight of her colleagues in sending a letter to David L. Yowan, President and Chief Executive Officer of student loan servicer Navient, urging the servicer to cancel decades-old private student loans pushed onto borrowers attending fraudulent, for-profit colleges.
In April 2024, Senators Warren, Blumenthal, Markey, and Van Hollen released a new report: Servicing Scandals: Student Loan Servicers’ Failures During Return to Repayment, which reveals a decades-long pattern of student loan servicer incompetence and misconduct that has affected millions of borrowers nationwide.
In April 2024, Senator Elizabeth Warren led a hearing on student loan servicer Higher Education Loan Authority of the State of Missouri (MOHELA) and its failures during borrowers’ return to repayment, including MOHELA’s mismanagement of the Public Service Loan Forgiveness program.
In March 2024, Senators Elizabeth Warren and Ron Wyden (D-Ore.), Chair of the Senate Finance Committee, along with U.S. Representatives Ayanna Pressley (D-Mass.), Pramila Jayapal (D-Wash.), Raúl Grijalva (D-Ariz.), and John Larson (D-Conn.), led their colleagues in calling on the Social Security Administration (SSA), the U.S. Department of the Treasury (Treasury), and the U.S. Department of Education to end the practice of offsetting Social Security benefits to pay off defaulted student loans.
In February 2024, Senator Warren, Majority Leader Chuck Schumer (D-N.Y.), and Senator Bernie Sanders (I-Vt.) released a statement calling for an investigation into student loan mismanagement by MOHELA.
In January 2024, Senators Warren, Schumer, Sanders, Senator Raphael Warnock (D-Ga.), and Senator Alex Padilla (D-Calif.), along with Representative Ayanna Pressley, Assistant Democratic Leader Jim Clyburn (D-S.C.), Representative Frederica Wilson (D-Fla.), and Representative Ilhan Omar (D-Minn.), led their colleagues in calling on the Secretary of Education Miguel Cardona to host a fourth session of the student debt negotiated rulemaking to consider relief for borrowers experiencing financial hardship.
In December 2023, U.S. Senators Warren, Richard Blumenthal, Ed Markey,, and Chris Van Hollen (D-Md.) sent follow-up letters to student loan servicers – MOHELA, EdFinancial, Nelnet, and Maximus – raising concerns about borrowers’ problems with return to repayment, requesting information about the borrower experience, and pushing back on the servicers’ claim that budget shortfalls limit their ability provide quality customer service to millions of borrowers.
In December 2023, Senators Warren, Schumer, Sanders, Alex Padilla (D-CA), and Representatives Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), and Frederica Wilson (D-Fla.) sent a letter to the U.S. Secretary of Education Miguel Cardona, urging him to leverage his existing and full authority under the Higher Education Act to provide expanded student debt relief to working and middle-class borrowers.
In August 2023, Senator Warren, Congresswoman Ayanna Pressley, Senate Majority Leader Chuck Schumer (D-N.Y.), Senators Alex Padilla and Raphael Warnock (D-Ga.) and U.S. Representatives Ilhan Omar, Jim Clyburn, and Frederica Wilson led 79 other lawmakers in a letter to President Joe Biden, urging him to swiftly deliver on his promise to deliver student debt cancellation to working and middle class families by early 2024.
In October 2022, Senator Warren and Representative Ayanna Pressley (D-Mass.) visited communities across Massachusetts to celebrate the Biden administration’s student debt cancellation plan and help residents sign up for student loan relief.
In March 2022, Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Brown and Representatives Pramila Jayapal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College.
In January 2022, Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Jayapal, Pressley, Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration’s legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.

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