MOHELA slow to process Public Service Loan Forgiveness applications, class action alleges (2024)

MOHELA PSLF class action lawsuit overview:

• Who: Spencer Morgan, Francis Novak and Rowena Koenig filed a class action lawsuit against the Higher Education Loan Authority of the State of Missouri, known as MOHELA, as well as the United States Department of Education and its secretary, Miguel Cardona.
• Why: Morgan, Novak and Koenig claim MOHELA failed to process and render decisions in a timely manner for student loan forgiveness applications submitted by borrowers enrolled in the federal Public Service Loan Forgiveness program.
• Where: The MOHELA class action lawsuit was filed in Missouri federal court.

The Higher Education Loan Authority of the State of Missouri (MOHELA) is unreasonably slow to process and render decisions for student loan borrowers enrolled in the federal Public Service Loan Forgiveness (PSLF) program, a new class action lawsuit alleges.

Plaintiffs Spencer Morgan, Francis Novak and Rowena Koenig claim that, despite servicing the PSLF program for more than a year before student loan payments resumed on Sept. 1, 2023, MOHELA has failed to process and render decisions on pending PSLF applications in a timely manner.

“In some instances, the PSLF applications have been sitting for over a year and MOHELA has still not rendered a decision,” the MOHELA class action states.

The PSLF program allows federal student loan borrowers working in public service to qualify for loan forgiveness after making 120 qualifying payments — the equivalent of 10 years of payments, according to the MOHELA class action. The program was created by a bill signed into law by President George W. Bush in 2007, with the intention of easing the financial burden for individuals to work for federal, state, local or tribal governments, the U.S. military, or in certain nonprofit fields.

The contract for servicing the PSLF program was awarded to MOHELA starting in the summer of 2022, with the switch coming during a student loan repayment pause put in place as part of COVID-19 pandemic relief efforts, according to the MOHELA class action.

The United States Department of Education and its secretary Miguel Cardona are also named as defendants in the class action lawsuit and accused of breach of contract.

Borrowers allegedly forced to make payments on loans that ‘should have already been forgiven’

Morgan, Novak and Koenig want to represent a nationwide class, New York class and California class of everyone who has submitted applications for PSLF forgiveness to MOHELA that the company has not yet processed or rendered a decision on.

“As a result of MOHELA’s delays, as well as the delays of the Department of Education and Secretary Cardona, those enrolled in PSLF are now forced to make payments on loans that should have already been forgiven,” the MOHELA class action states.

Morgan, Novak and Koenig claim MOHELA is guilty of unjust enrichment, negligence, breach of fiduciary duty and breach of contract, and of violating the New York Student Loan Servicers Act and the Fair Debt Collection Practices Act, among other laws in California and New York.

The plaintiffs are demanding a jury trial and requesting injunctive and/or declaratory relief along with an award of actual, general, special, incidental, statutory, punitive and consequential damages for themselves and all class members.

The U.S. Supreme Court ruled last summer that President Joe Biden could not forgive federal loans and that his administration had overstepped its authority with its $430 billion student loan forgiveness plan.

Have you submitted an application for PSLF forgiveness to MOHELA? Let us know in the comments.

The plaintiffs are represented by Amy Collignon Gunn and Anthony G. Simon of The Simon Law Firm PC and Joseph G. Sauder, Matthew D. Schelkopf, Joseph B. Kenney and Juliette T. Mogenson of Sauder Schelkopf LLC.

The MOHELA PSLF class action lawsuit is Morgan, et al. v. Higher Education Loan Authority of the State of Missouri d/b/a MOHELA, et al., Case No. 4:24-cv-00147, in the U.S. District Court for the Eastern District of Missouri.

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