Warren plans to hold loan servicer accountable
Sheila O’Neil, a Lynn elementary school teacher, was in disbelief Monday morning when she learned that she would be relieved of her student loan payments.
“It’s just life-changing,” said O’Neil, who has been teaching for 31 years and now plans to retire next year, something she wouldn’t have been able to do if her loans hadn’t been forgiven. She had been paying almost $600 per month, money that can now go toward her retirement fund.
O’Neil was still clutching her relief paperwork as she shared her story with US Senator Elizabeth Warren, along with several other borrowers and educators who gathered in downtown Boston at the Massachusetts offices of the American Federation of Teachers, a union of 1.7 million public service professionals including teachers and nurses.
In a roundtable conversation moderated by Boston Teachers Union president Jessica Tang, O’Neil and other AFT members discussed the impact of student loan relief with Warren, who has championed student debt cancellation efforts in the federal government.
Warren told the teachers she will call on the chief executive of the Missouri Higher Education Loan Authority, or MOHELA, a major student loan servicer, to testify before the Senate subcommittee on economic policy in response to servicing failures that have made debt relief inaccessible for some eligible borrowers.
The hearing is an effort to “get some answers,” she said, to hold MOHELA accountable, and to signal a push for President Biden to continue his debt forgiveness efforts, despite the Supreme Court striking down his robust $400 billion relief proposal last year.
The student debt crisis — and the student loan system in general — has “turned out to be a monster,” Warren said, with the price tag on higher education soaring above most families’ financial capabilities and swamping graduates in “unmanageable” debt.
She pointed to efforts made by the Biden administration, including his use of the Public Service
Loan Forgiveness program to wipe out debt for nearly 800,000 borrowers. Before Biden, the program had relieved just 7,000 borrowers since it was passed during George W. Bush’s presidency.
But parts of the system, she said, are still broken.
“We can sit around and be happy about what we’ve gotten — and it’s so much more than what we had before,” Warren said. “But it’s not as much as we are entitled to. It is not as much as we are going to get.”
Warren’s inquiry into the loan servicing company comes after the release of the MOHELA Papers, a years-long investigation by the AFT and the Student Borrower Protection Center. The report found that MOHELA, which is the primary servicer for public service loan forgiveness, has failed to perform basic servicing functions and has implemented a “complex ‘call deflection’ scheme,” said Persis Yu, deputy executive director of the Student Borrower Protection Center.
Yu called this scheme a “Byzantine loop of misinformation and false promises.”
More than four in 10 student loan borrowers using MOHELA services have experienced a servicing failure since loan payments resumed in September 2023 with the end of a pandemic relief program, according to the report.
Yu added that federal records show more than 800,000 unprocessed Public Service Loan Forgiveness forms. And MOHELA’s “call deflection scheme” redirects borrowers away from customer service and correct information about loans, in some cases costing them hundreds to thousands of dollars in potential relief, Yu said.
In an impassioned introduction, AFT president Randi Weingarten lauded Warren’s efforts to “reward good behavior and hold bad behavior accountable.”
“We can’t keep saying to people, ‘It’s really important to go to college,’ and then make it so unaffordable that only the rich can go to college. It exacerbates the wealth gap,” Weingarten said.
Educators and AFT members shared their experiences navigating the stress of ever-climbing loan payments and the tricky processes behind loan forgiveness programs like MOHELA.
Catharine Curran, a professor at the University of Massachusetts Dartmouth, said she paid nearly $200,000 over 10 years before her debt was relieved. During that time, she worked second and third jobs to swing the payments. She put off marriage to avoid making her husband help shoulder her debt and pored over congressional documents to ensure she was taking all the correct steps in her loan payments.
Now that her debt has been forgiven, she’s down to one job, she said, and she got married last year. “That sense of relief is palpable,” she said.
Curran dismissed the perception that debt relief programs allow college grads to shrug off their responsibilities.
“No, no, baby. I paid my debt,” Curran said. “But every year, the principal on my loan got bigger ... You can pay and pay and pay, and the amount goes up and up and up.”