Student Loan Errors Prompt $7.2M Penalty
October 31, 2023
Katherine Knott
The Education Department is punishing one of its largest contractors after a billing error led thousands to miss their student loan payments this month.
Millions of borrowers didn’t receive their student loan bills on time, a mistake that led thousands of borrowers to miss their payments, the Education Department said Monday.
Because of that error, the department won’t pay the Missouri Higher Education Loan Authority, known as MOHELA, all of the money it’s due for the month of October. Withholding the $7.2 million is a significant step for the agency, which is grappling with a rocky restart of student loan payments following a three-year pandemic pause.
Since the restart of payments, borrowers have reported a range of issues with MOHELA and other companies that manage or service federal student loans. Some said they received inaccurate information about payments; others noted long wait times to get ahold of their loan servicer. Officials are hoping that withholding payment for MOHELA will prevent future errors.
