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Athena's Story: Fighting Back Against MOHELA's Student Loan Servicing Failures

Updated: 4 days ago

Student loans can be a heavy burden, but when servicers like MOHELA make it impossible to manage your debt responsibly, it turns into a nightmare.


Today, we're sharing the story of Athena, a California resident who's taking a stand against systemic failures in student loan servicing. On July 14, 2025, Athena filed a class action lawsuit in San Diego Superior Court against the Higher Education Loan Authority of the State of Missouri (doing business as MOHELA), alleging widespread violations of California consumer protection laws. Her experience highlights issues that thousands of borrowers may be facing—issues like denied access to loan records, ignored requests for payment relief, and aggressive debt collection tactics.

If you're a California borrower dealing with MOHELA and recognize any part of Athena's story in your own struggles, you're not alone. Read on to learn the details, and consider reaching out for help.


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The Facts: Athena's Struggle with MOHELA

Athena, a San Diego County resident, is the primary borrower on a federal student loan serviced by MOHELA. What should have been a straightforward process of managing her repayments turned into months of frustration and harassment.


  • No Online Access to Loan Records: Since MOHELA took over servicing her loan, Athena has been unable to log in to view her account details. Every attempt results in a message saying there's no record of her loan—despite MOHELA automatically deducting over $1,000 from her bank account each month.


  • Ignored Attempts to Communicate: Starting in January 2025, Athena tried repeatedly to contact MOHELA to fix the online access issue and request a reduction in her monthly payment to $500 under Income-Driven Repayment (IDR) guidelines, for which she qualifies. Phone calls led to wait times of 2-3 hours or more, and written letters went unanswered.


  • Unprocessed IDR and Forbearance Requests: Desperate for help, Athena hired an attorney in May 2025. On May 27, her lawyer submitted an IDR request to lower her payments and a forbearance request to pause them while it was processed. To this day, MOHELA hasn't acted on either, leaving Athena in limbo.


  • Harassing Debt Collection Despite Pending Requests: Even with her requests pending, MOHELA labeled Athena's loan as delinquent. They bombarded her, her mother, and her 83-year-old grandfather (the co-signer) with threatening letters, emails, and robocalls. MOHELA even attempted an unauthorized withdrawal of thousands of dollars from her bank account and reportedly dinged their credit reports by notifying bureaus of the "delinquency."


These aren't isolated incidents. Public reports, including a 2023 U.S. Department of Education press release and a 2024 investigative report by the Student Borrower Protection Center, reveal MOHELA's widespread problems: deliberate refusals to assist borrowers, failures to provide loan information, and delays in processing IDR and forbearance requests. Athena believes thousands of California borrowers are affected, which is why her lawsuit seeks class action status.


The proposed class includes all California residents (or co-signers/guarantors) with MOHELA-serviced student loans who, within the applicable statutes of limitations, experienced:

  1. Inability to access loan records online,

  2. Unprocessed requests for payment reductions or forbearances,

  3. Improper debt collection efforts, or

  4. Improper credit reporting related to their loans.


If certified, this class could bring justice to many, with common questions about MOHELA's policies dominating the case.


The Causes of Action: Holding MOHELA Accountable

Athena's lawsuit doesn't just recount her ordeal—it accuses MOHELA of violating multiple California laws designed to protect consumers and borrowers. Here's a breakdown of the five causes of action:


  1. Violation of the California Student Borrower Bill of Rights (Civil Code § 1788.100 et seq.): This law requires servicers like MOHELA to provide timely access to account information, process repayment plans promptly, and respond to borrower inquiries. MOHELA failed Athena and the class by denying online access, ignoring communications, delaying IDR/forbearance processing, and treating accounts as delinquent during pending requests. Athena sent a notice on July 10, 2025, demanding fixes, but got no response. The suit seeks restitution for overpayments, declaratory relief, and fees.


  2. Violation of the Rosenthal Fair Debt Collection Practices Act (Civil Code § 1788 et seq.): MOHELA acted as a debt collector by misrepresenting loans as delinquent and harassing borrowers with collections while relief requests were pending. This entitles affected borrowers to actual and statutory damages, attorneys' fees, injunctive relief, and punitive damages for willful misconduct.


  3. Violation of the California Consumer Credit Reporting Agencies Act (Civil Code § 1785.1 et seq.): MOHELA furnished inaccurate delinquency information to credit bureaus without properly investigating pending requests. They also skipped reasonable reviews of loan status before reporting to credit bureaus. Plaintiff and the Class members are entitled to damages, fees, injunctive relief, and punitive damages.


  4. Violation of the California Consumer Legal Remedies Act (Civil Code § 1750 et seq.): MOHELA deceived borrowers by advertising easy online access, repayment tools, and compliant services that didn't exist in practice. Examples include false promises like "Your online account awaits" and tools to "recalculate or switch your IDR plan." Athena notified MOHELA on July 10, 2025, and currently seeks injunctive relief and fees, with potential damages to follow.


  5. Violation of the California Unfair Competition Law (Business & Professions Code § 17200 et seq.): All the above violations make MOHELA's practices unlawful, unfair, and fraudulent. Borrowers lost money due to unprocessed requests and false representations about account management. Relief includes restitution and injunctions to stop these behaviors.


Athena demands restitution, damages (actual, statutory, and punitive where applicable), attorneys' fees, costs, injunctive relief, and a jury trial. The goal? To force MOHELA to clean up its act and compensate those harmed.


Join the Fight: If This Sounds Like Your Experience, Contact Us

Athena's story is a powerful reminder that borrowers shouldn't suffer in silence. MOHELA's failures aren't just inconvenient—they violate your rights and can wreck your finances and credit.


If you're a California resident with a MOHELA-serviced student loan and have faced similar issues—like blocked online access, ignored IDR requests, or unjust collections— you may be part of this class. Don't wait for things to get worse.


Contact the experienced attorneys at Clapp & Lauinger LLP today for a free consultation. They can help determine if you qualify and guide you through your options.

Share this post if you know someone who could benefit, and stay tuned to studentloancase.com for updates on this case and other student loan news.


Together, we can hold servicers accountable.


Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. The lawsuit is ongoing, and outcomes are not guaranteed.

 
 
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