Borrowers accuse student loan servicer of mismanaging forgiveness

Two borrowers filed a lawsuit against the Missouri Higher Education Loan Authority (MOHELA) on Monday alleging it mismanaged student loan forgiveness they are owed under the Public Service Loan Forgiveness Program (PSLF). 

Jennifer Joy and Misty Thomas allege in the suit that they both have met the requirements to receive student debt relief under the PSLF, such as working in a government or certain nonprofit roles while making 120 consecutive monthly loan payments.  

They claim they submitted their applications multiple times since 2022, but MOHELA is still making them restart their payments.

The lawsuit accuses the loan servicer of breach of contract and violating certain consumer protection statutes.  

“Our clients, like the many other borrowers who contacted us, worked in public service jobs and relied on the Public Service Loan Forgiveness program. The PSLF was designed to encourage careers in public service by providing for loan forgiveness after ten years,” said Joseph Kenney, a partner at Sauder Schelkopf LLC, who is suing on the borrowers’ behalf. 

“Now that these individuals have fulfilled their obligations, they should receive the benefits promised by PSLF.  Instead, due to no fault of their own, they are now being forced to make extra loan payments,” he added.

The PSLF program has long been chastised by borrowers and advocates for difficulties receiving relief once individuals meet the requirements. MOHELA warned last year that processing applications would take longer because of changes the White House made that allowed more borrowers to qualify for relief.  

The Hill has reached out to MOHELA and the Department of Education for comments.