December 19, 2024

Senate Investigation Reveals MOHELA May Have Contributed to Nearly 2 Million Student Loan Duplication Errors Appearing on Borrowers’ Credit Reports

Senators Urge CFPB, Education Department to Investigate and Hold Companies Accountable

“[W]e write to share the results of this investigation—which suggest that MOHELA’s failure to provide advanced notice of the transfer to the CRAs contributed to nearly two million credit reporting errors.”

Text of Letter (PDF)

Washington, D.C. – In a letter to the Consumer Financial Protection Bureau (CFPB) and the Department of Education (ED), U.S. Senators Elizabeth Warren (D-Mass.), 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 May 2024, reports surfaced about incorrect, duplicate student loan records appearing on student borrowers’ credit reports after their loans were transferred from NelNet to MOHELA. For many borrowers, the errors led to reduced credit scores, hurting their ability to obtain mortgages, car loans, and other credit. The initial reports did not indicate how many borrowers had been affected, for how long, or who was responsible. 

In August 2024, the senators opened an investigation into the matter, sending inquiries to NelNet, MOHELA, and the three largest credit reporting agencies (CRAs), Equifax, Experian, and Transunion, requesting information on the impact on borrowers and how the mistakes occurred. The results of the investigation include brand new findings that suggest that MOHELA’s failure to provide advanced notice of the transfer to the CRAs contributed to nearly two million credit reporting errors. The investigation revealed that:

  • MOHELA allegedly failed to inform credit reporting agencies of the loan transfers from NelNet, contributing to nearly two million credit reporting errors. According to the CRAs, there is an established protocol in which loan servicers provide advanced notice of a loan transfer, including information regarding “the number of loans being transferred, the timing of the transfer, and the characteristics of the loans.” All three of the credit reporting agencies reported that they did not always receive this advanced notice from MOHELA. 
  • Hundreds of thousands of borrowers were affected by these errors, for as long as 1.5 years. Between the time when the duplicate errors began to occur (in January 2023) and when the credit reporting agencies claimed to have fixed all the errors (by the end of August 2024), the agencies collectively identified over 200,000 consumers affected by these mistakes.
  • In over 100,000 cases, the errors resulted in incorrect credit scores appearing on borrowers’ accounts. Approximately 14,000 borrowers experienced decreased credit scores, with many experiencing significant declines in scores. 
  • Borrowers submitted approximately 7,500 complaints and disputes in attempts to correct the errors.
  • None of the servicers or credit reporting agencies took responsibility for the credit reporting errors. MOHELA claimed that it “implemented and follows the applicable process required under its federal loan servicing contract.” The credit reporting agencies attributed the errors to the loan servicers’—and particularly MOHELA’s—failure to provide advanced notice of the loan transfers.
  • NelNet, MOHELA and the credit reporting agencies have no plans to compensate affected borrowers. When asked how each company planned to compensate borrowers harmed by the reporting errors, NelNet, MOHELA, and the credit reporting agencies all reported having no plans to compensate affected borrowers.

The lawmakers acknowledged that their investigation only covered loans transferred from NelNet to MOHELA and encouraged the CFPB and ED to “investigate duplicate student loan reporting errors across federal student loan servicing in order to determine the scope of the problem and ensure safeguards are in place such that similar mistakes do not occur again.” 

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

  • 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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