The Missouri Higher Education Loan Authority, MOHELA, is being punished by the U.S. Department of Education for not sending borrowers their billing statements on time.

It was announced that the Department of Education will withhold $7.2 million from MOHELA after it was found that over 2.5 million borrowers were not sent their billing statements in a timely manner to when their payment was due. 

As a result of this failure, over 800,000 people were late making their payments. 

MOHELA was also instructed to place anyone affected by this issue in forbearance, meaning interest is not due on payments and the payments are paused, until the problem is resolved. 

Other loan servicers were found to have given borrowers billing statements with incorrect amounts on them. Those affected will also be placed in forbearance until this issue is resolved. 

Borrowers who are placed in forbearance due to these issues will have months spent in forbearance counted towards loan forgiveness credits, under Public Service Loan Forgiveness or Income Driven Repayment. 

Miguel Cardona, U.S. Secretary of Education, explained the motivation behind these actions. 

“The actions we’ve taken send a strong message to all student loan servicers that we will not allow borrowers to suffer the consequences of gross servicing failures,” Cardona said in a Department of Education press release. “We are committed to fixing our country’s broken student loan system, and that includes strengthening oversight and accountability and taking every step possible to improve outcomes for borrowers.”

The Department of Education will continue to monitor loan providers and may take further action if it is found that they are not fulfilling their obligations to borrowers.