Holding MOHELA Accountable: American Federation of Teachers' Lawsuit Against MOHELA

MOHELA services over $380 billion in federal student loans for more than eight million borrowers, but according to a recent lawsuit by the American Federation of Teachers ("AFT"), MOHELA's track record is marred by systemic incompetence and deceptive practices. According to the lawsuit, borrowers have reported delays in processing forgiveness applications, incorrect payment calculations leading to overcharges, failure to provide timely billing statements, and unresponsive customer service that leaves people in limbo for months or even years. Yet throughout this time, MOHELA's revenues skyrocketed from $114.7 million in 2022 to $358.6 million in 2023, largely from servicing fees.

In the AFT complaint filed against MOHELA, filed under Case No. 2024-CAB-004575 in the District of Columbia Superior Court, AFT alleges that MOHELA engaged in unfair and deceptive trade practices under the D.C. Consumer Protection Procedures Act. Specific grievances include failing to send billing statements to 2.5 million borrowers, resulting in over 800,000 delinquencies; using incorrect guidelines that forced 280,000 borrowers to overpay; and implementing a call deflection scheme that diverts callers to websites instead of providing live support, leading to excessive wait times. The complaint further accuses MOHELA of misleading borrowers about their rights, delaying IDR processing, and refusing to issue refunds for overpayments.

These allegations mirror the experience of our client and the class we seek to represent. Our class action seeks to protect California residents and hold MOHELA accountable for violations of California's consumer protection laws.

Who Can Join Our Class Action?

If you're a California MOHELA borrower who has experienced any of the following, you may be eligible to join our class:

• Delays or denials in IDR applications without proper explanation.

• Inadequate access to online loan accounts.

• Incorrect payment calculations or failure to apply payments correctly.

• Untimely or missing billing statements leading to delinquency.

• Poor customer service, including long hold times or unhelpful responses.

• Overcharges, refused refunds, or misleading information about loan terms.

Join the Fight for Fairness

At Clapp & Lauinger, we've successfully litigated against major financial institutions and are committed to securing the relief our clients deserve. If you are a California resident that has been impacted by MOHELA's misconduct, contact us today for a free consultation.

Together, we can force real change and ensure student loan servicers fulfill their obligations. Visit our website or contact us to learn more