A new class action lawsuit has been filed against student loan servicer MOHELA for allegedly failing to process Public Service Loan Forgiveness (PSLF) applications in a timely manner. This lawsuit comes as the debate around student loan forgiveness continues to make headlines.
Overview of the Lawsuit
Three borrowers – Spencer Morgan, Francis Novak, and Rowena Koenig – filed a lawsuit against MOHELA and the Department of Education. They claim that despite servicing PSLF for over a year, MOHELA has failed to process applications quickly. Some applications have been pending for over one year, and I have yet to make a decision.
The plaintiffs want to represent a nationwide class of all borrowers who have submitted PSLF applications to MOHELA that still need to be processed. They argue that MOHELA’s delays have forced borrowers to make payments on loans that should have already been forgiven through PSLF.
The lawsuit accuses MOHELA and the Department of Education of unjust enrichment, negligence, and breach of contract. It seeks monetary damages and asks the court to order MOHELA to process outstanding PSLF applications promptly.
Background on PSLF
The PSLF program was created in 2007 to provide loan forgiveness to borrowers working in public service after 120 qualifying payments (10 years). Last summer, a Supreme Court decision blocked President Biden’s broad student loan forgiveness plan. However, PSLF remains available.
MOHELA began servicing PSLF loans in 2022 during the student loan repayment pause. The plaintiffs claim MOHELA still needs to act on applications despite having over a year to prepare before payments restarted in September 2022.
Impact on Borrowers
For borrowers applying for PSLF forgiveness, long processing delays can negatively impact their finances. Applicants are forced to continue making monthly payments while waiting for a decision – payments that may be unnecessary if their loans are ultimately forgiven.
Delays also prolong the stress and uncertainty borrowers face while awaiting a determination. Consumer advocates argue servicers like MOHELA need to provide the level of service student loan borrowers deserve.
Also Read – Why Student Loan Debt Should Be Forgiven ?
Looking Ahead
With this lawsuit filed, MOHELA will need to formally respond to the allegations and make its case in court. The Department of Education has also been criticized for lax oversight of servicers so that pressure may mount for policy changes.
For now, borrowers submitting PSLF applications should be prepared for longer than ideal wait times. Approval can take months or over a year in some cases. Be sure to submit applications accurately and respond quickly to any requests for more information.
The path to student loan forgiveness remains rocky for many. This lawsuit signifies ongoing problems but hopefully leads to improvements in how servicers handle forgiveness programs. For struggling borrowers, persistently pursuing loan relief options like PSLF remains critical.
Key Points
- A new class action lawsuit alleges MOHELA is failing to process PSLF forgiveness applications promptly
- Plaintiffs say long delays have wrongly forced borrowers to keep making payments on loans eligible for discharge
- The lawsuit seeks to represent all borrowers with unresolved PSLF applications at MOHELA
- Slow processing times have been an ongoing issue with PSLF and other forgiveness programs
- Borrowers awaiting decisions continue facing financial stress and uncertainty
- More oversight of servicers may be needed to improve administration of student loan relief programs
FAQ
What is the MOHELA lawsuit about?
The lawsuit alleges MOHELA has failed to process Public Service Loan Forgiveness applications in a timely manner, forcing borrowers to make payments on loans that should have already been forgiven.
Who is suing MOHELA?
Three borrowers – Spencer Morgan, Francis Novak, and Rowena Koenig – filed the class action lawsuit seeking to represent all applicants with delayed PSLF applications.
Why are they suing MOHELA and the Department of Education?
The plaintiffs argue that MOHELA’s delays amount to unjust enrichment, negligence, and breach of contract. They claim the Department of Education also failed to hold MOHELA accountable.
What kind of damages or relief does the lawsuit seek?
The borrowers want monetary damages. They also want a court order for MOHELA to process all outstanding PSLF applications promptly.
How long have delays been an issue with PSLF?
Consumer advocates have complained for years about long wait times for PSLF approvals, often well beyond the 90 days recommended by the Dept. of Education.
What should borrowers do if they have a pending PSLF application?
Check the status regularly and respond quickly to any requests for more information. Be prepared for a lengthy wait, but continue contacting your servicer for status updates.
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