Missouri-based student loan agency slapped with $7.2 million penalty

ST. LOUIS, Mo. (KMOV) – The U.S. Department of Education announced it is withholding $7.2 million in payments to the Missouri Higher Education Loan Authority, known as “MOHELA,” after the semi-governmental agency failed to send out 2.5 million student loan bills on time.

“We will not allow borrowers to suffer the consequences of gross servicing failures,” U.S. Education Secretary Miguel Cardona said in a statement on social media.

The error led to more than 800,000 borrowers missing their payment date, which put them in delinquent status.

The DOE ordered MOHELA to pause student loan interest again for all those affected by the error until it’s resolved.

Many borrowers expressed frustration online, including one who wrote, ”They were not ready for this repayment time, and it will never be right. This will be a monthly task for the months ahead!”

Jayme Renfro, an Iowa-based university professor, was recently on hold with MOHELA to confirm that she’s eligible for loan discharge under the Public Service Loan Forgiveness program.

After hours of waiting on the phone, she was able to speak with a MOHELA staff member.

“She said, ‘Oh, you’re calling from Iowa?’” Renfro recounted. “I said, ‘Yes.’ And she goes, ‘Oh, you need to call a different phone number.’”

Renfro was disappointed when the number provided connected to the local Direct TV office.

“It was not for anything that had anything to do with student loans at all; it was for cable,” Renfro said. “So, I haven’t been able to get back through.”

Nicole Johnson said getting her loan forgiveness processed took weeks.

“I submitted all my documents by Oct. 27, 2022,” Johnson said. “I didn’t get emails about need to resubmit until February.”

Johnson said she was eventually able to get through to MOHELA by calling as early as possible and having all her documentation ready.

“One thing that was recommended to me is just to ask for forbearance,” Johnson advised. “So, while your paperwork is in process, you’re not accruing any late penalties, they’re not making any credit reports or anything like that.”

As of this summer, more than $29 billion in student debt is held by Missouri residents.

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