AFT Sues MOHELA Again, Cites Years of Student Loan Servicing Failures

AFT Expands Legal Action Against MOHELA Amid Allegations of Ongoing Misconduct

WASHINGTON—The American Federation of Teachers (AFT) has expanded its legal battle against the Higher Education Loan Authority of the State of Missouri (MOHELA), modifying its original lawsuit to incorporate new allegations of persistent consumer protection violations. The amended complaint, filed yesterday, outlines MOHELA's continued detrimental practices affecting student loan borrowers, as per the updated legal filing. The AFT is represented by the Protect Borrowers, National Consumer Law Center (NCLC), and Selendy Gay PLLC.

Access the amended complaint here.

The new filing highlights federal data pointing out MOHELA’s poor customer service compared to other major student loan servicers. Borrowers under MOHELA experience notably longer wait times—up to seven times longer than those of ED Financial and over 50 times longer than Aidvantage, CRI, and NelNet. Consequently, MOHELA has the highest rate of callers abandoning calls, with over 14% dropping off, compared to a maximum of 5% for other servicers.

Statements from AFT and Legal Counsel

“When we first sued MOHELA 18 months ago we exposed how it had abandoned its role to help borrowers pay down debt and instead redirected into a Kafkaesque rabbit hole of denial and delay to pad its own profits,” stated AFT President Randi Weingarten. “Rather than fulfill its responsibilities, MOHELA abdicated and deflected them—and we were determined to hold them to account. But instead of working with us on a solution, they shamefully doubled down, fighting us at every turn to derail any attempt at accountability.

“Today we are refiling our complaint to reveal MOHELA’s illegal business practices, restate the harm inflicted on student borrowers, and document the time, effort and money that the AFT has spent to expose the misinformation and malfeasance at the company’s core. On behalf of the nation’s 45 million student borrowers, we are fighting for justice and fairness, and to stop illegality and deception. If any case underlines the need for robust consumer protections it is this one,” continued Weingarten.

“For years, AFT members and borrowers across the country have suffered as a result of MOHELA’s refusal to provide even the most basic customer service and accurate record keeping,” stated Protect Borrowers Legal Director Winston Berkman-Breen. “In amending its complaint, the AFT seeks to demonstrate that the company’s historic failures are not one-offs that have been corrected but are deeply systemic business decisions not to invest in doing its one job well: servicing student loans.”

“Student loan borrowers continue to pay the price for MOHELA’s systemic loan servicing failures. While time has passed since we filed our initial complaint, time itself could not resolve the harm MOHELA inflicts on vulnerable borrowers,” said Alpha Taylor, staff attorney at the National Consumer Law Center. “We continue to fight to hold MOHELA accountable and to bring relief to the millions of borrowers who are living the consequences of its servicing failures.”

Further Reading

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About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.

Learn more at protectborrowers.org or follow us on social @BorrowerJustice.

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The AFT represents 1.8 million pre-K through 12th-grade teachers; paraprofessionals and other school-related personnel; higher education faculty and professional staff; federal, state and local government employees; nurses and healthcare workers; and early childhood educators.