The Department of Education is withholding $7.2 million of payments from MOHELA over the issue
One of the government’s student loan servicers failed to send timely billing statements to roughly 2.5 million borrowers, pushing more than 800,000 into delinquency, the Department of Education said Monday.
Advocates and borrowers have demanded the Department hold servicers accountable for these issues. Monday’s announcement marks the first time in recent history that the agency has publicly announced it’s withholding payment from servicers. Complicating the unprecedented task of resuming payments was the Biden administration’s announcement that it would revamp student loan repayment plans. Officials launched the SAVE plan earlier this year. While the program provides historically low monthly payments for wide swaths of borrowers, it’s new both to servicers and to borrowers, which has posed challenges for implementation.Servicers and the agency are dealing with less than ideal levels of funding as payments resume, they’ve said.
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