Student Loan Company MOHELA Denies Allegations of “Call Deflection” Scheme

The Higher Education Loan Authority of the State of Missouri, or MOHELA, has denied allegations made against it by a teachers union and an advocacy group claiming the student loan company took part in a “call deflection scheme.”

On Wednesday, the American Federation of Teachers and the Student Borrower Protection Center published a 47-page report, dubbed The MOHELA Papers, accusing MOHELA of mismanaging a student loan program and actively avoiding borrowers who are calling for assistance.

MOHELA has denied the accusations made in the report and called it “nothing more than a PR campaign.”

The report contained archives suggesting that MOHELA used a “byzantine loop of misinformation and false promises” when student borrowers called the company for help following a large percentage of borrowers failing to pay their bills when they came due.

Nearly four in ten borrowers failed to pay their loans since the pandemic, according to the U.S. Department of Education.

Allegations toward MOHELA include how the company wrongfully denied Public Service Loan Forgiveness (PSLF) applications. PSLFs allow student loan borrowers who work in the public service sector to cancel their loans provided they have been paying off their loans for ten years. The allegations claim that MOHELA allowed these PSLF applications to pile up and falsely informed its borrowers they did not qualify for forgiveness. Nearly 900,000 unprocessed application forms were awaiting approval.

The second allegation claims MOHELA used a “call deflection scheme” to confuse and divert borrowers away from customer service representatives.

Call deflections were detailed in MOHELA’s return to repayment playbook. MOHELA said a call deflection was a term used by the Federal Student Aid and that the department advised servicers to push customers to self-service options rather than help over the phone.