A student-loan company's 'history of mismanagement' is putting millions of borrowers in public service at risk with payments about to resume, 2 Democratic lawmakers say

• Reps. Katie Porter and Joe Courtney sent a letter to student-loan company MOHELA on Tuesday.
• They asked how the company is using its resources to manage the Public Service Loan Forgiveness portfolio.
• Borrowers have reported difficulty getting help from MOHELA during the payment pause.

Student-loan payments haven't started yet — but there's already a host of problems borrowers are running into. A pair of Democratic lawmakers want answers.

On Tuesday, Reps. Katie Porter and Joe Courtney sent a letter to Scott Giles, the CEO of student-loan company MOHELA, which manages the Public Service Loan Forgiveness portfolio. During the student-loan payment pause — set to end in September — President Joe Biden's Education Department announced a series of reforms to PSLF, which is intended to forgive student debt for government and nonprofit workers after ten years of qualifying payments.

The reforms included a limited-time waiver that allowed payments borrowers made that were previously ineligible for PSLF to count toward their forgiveness progress. While the waiver expired on October 31, 2022, the department is continuing to process those forms — and Porter and Courtney said in their letter that they're concerned with the way MOHELA has managed the changes.

"Servicing errors have been especially prevalent with MOHELA since the Department decided to exclusively contract with them for PSLF in July 2022," they said. "In the months following the Department's decision, thousands of borrowers reported issues having their applications processed in a timely manner, or getting in touch with a customer service representative capable of answering their enrollment or repayment questions."

"Borrowers deserve to know what these new changes mean for their student loan debt, but federal loan servicers, including MOHELA, have a history of mismanagement that inspires little confidence," they added.  

Porter and Courtney requested the Giles respond to a series of questions regarding MOHELA's operations by September 12, including whether the company has adequate staffing to service millions of borrowers, what the average wait time is for a borrower to get in contact with customer service, and what MOHELA's process is for incorporating reforms the Education Department announces into its servicing practices.

As Insider previously reported, some borrowers were experiencing hours-long hold times leading up to the expiration of the limited-time waiver to get even simple questions regarding their repayment status answered. One borrower said that "the first time I tried to call was a 144 minute estimated wait time. The second time I called was a 149 minute wait. And then most recently, I tried to call and it was 50 minutes. And each of these times I didn't have time to wait. I thought it would be a quicker call. And one time I stayed on the call for nearly three hours."

The issue primarily comes down to a lack of funding and resources to properly staff student-loan servicers. Nelnet, another student-loan company, announced in March that it was cutting its call center hours and laying off 550 employees likely due to budget constraints. Nelnet has also told borrowers over past weeks on X, formerly Twitter, that it was experiencing an influx of requests and it would take longer than normal to respond to questions — and it even faced technical difficulties that caused it to temporarily shut down its call center. 

To give borrowers some relief as repayment looms, the Education Department announced a 12-month "on-ramp" starting in October during which borrowers who miss payments will not be reported to credit agencies. Interest will still accrue during that time, and it remains to be seen how servicers implement that guidance. 

 Are you running into issues with your student-loan servicer? Do you have anything to share regarding your student debt? Reach out to this reporter at asheffey@insider.com.