November 04, 2024

Warren, Senators Blast MOHELA for Abusing Borrowers with Potentially Illegal, Exploitative Terms of Use

MOHELA Forces Borrowers to Accept Terms to Use Website, Depriving Them of Their Rights

Letter follows U.S. Department of Education’s recent notice to MOHELA about servicing failures and potential contract violations

Text of Letter (PDF)

Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.),  Chris Van Hollen (D-Md.), and Tammy Duckworth (D-Ill.) wrote to the Executive Director and CEO of Higher Education Loan Authority of the State of Missouri (MOHELA), laying into the company for locking over eight million student loan borrowers into an abusive “terms of use” agreement that attempts to restrict their legal rights and absolves MOHELA of liability for outrageous misbehavior.

“Under its website’s Terms of Use, MOHELA disclaims its responsibility to provide borrowers with accurate information on their student loans, forces borrowers to waive their right to hold MOHELA accountable for harm created by MOHELA’s errors, and imposes troubling restrictions on borrowers’ ability to share basic information about their student loans,” wrote the senators.

MOHELA requires all borrowers that sign up for account access through their website to acknowledge that they agree with the Terms of Use. But these terms state that MOHELA “makes no warranty or guaranty that the website or the content of [the] website…will be accurate or reliable,” directly undermining MOHELA’s core responsibility as a federal student loan servicer to provide accurate information to borrowers about their student loans. Other provisions attempt to deprive borrowers of the means to hold MOHELA legally accountable for its failures, no matter what harms borrowers actually experience, and even prohibit borrowers from sharing website content – something borrowers often must do to get advice on their student loans.

“The exploitative nature of MOHELA’s Terms of Use is particularly insidious because borrowers do not have the choice to simply opt out,” wrote the senators. “Declining the website’s Terms of Use would deprive a MOHELA borrower of critical financial information on their own loans.” 

In addition to their predatory nature, MOHELA’s Terms of Use may be unlawful under the the Consumer Financial Protection Act (CFPA) and other consumer financial laws prohibiting financial firms from requiring consumers to waive rights guaranteed under federal law.

“We are alarmed by the exploitative nature of these new Terms of Use — particularly given MOHELA’s poor record supporting borrowers — and are concerned that they could potentially violate federal law,” wrote the senators.

MOHELA has consistently fallen short in providing basic servicing functions to borrowers. MOHELA has failed to send timely billing statements or sent the wrong bills to millions of borrowers during the return to repayment and is currently the subject of two separate lawsuits about its repeated failures to properly service borrowers. Last month, the U.S. Department of Education issued a contract violation notice to MOHELA, demanded a corrective action plan within 10 days, and stopped the assignment of new borrower accounts to MOHELA in response to the servicer’s failures.

The senators requested responses to their questions about MOHELA’s website’s Terms of Use by Sunday, November 17.

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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