A former employee of student loan servicer Mohela has revealed that the company trained its call center workers to keep customers on hold for at least 15 minutes before transferring them to a someone who can help them with an issue other than paying their loan or changing a repayment plan, according to a recent report from the Daily Mail.
“It was frustrating because you're instructed to follow the script very strictly,” said the anonymous former Mohela employee while speaking to the Daily Mail. “You're not allowed to say ‘I'm looking for this’ or ‘I can't find anything.’ You have to sound confident. You have to sound like you know what you're doing.”
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The former employee also alleges that the workers at Mohela were overworked and often faced threats from customers, and that there was “incompetency” within the “higher up chain” at Mohela and the U.S. Department of Education.
“We're talking about hundreds of thousands of dollars for some of these people, and the majority of that being in interest that they don't know where it came from,” said the former Mohela employee while speaking to the Daily Mail. “And we can't tell them because we don't know either.”
The revelation comes after U.S. Sen. Elizabeth Warren sent a letter to Mohela CEO Scott Giles on March 18 inviting him to testify before Congress at a hearing on April 10 titled “MOHELA’s Performance as a Student Loan Servicer.”
In the letter, she accused Mohela of botching the student loan repayment process and highlighted a report, which was released in February, that alleges that the company used a “‘call deflection’ scheme” to keep concerned borrowers away from speaking to a customer service representative and instead redirected them to parts of its website.
The report also alleges that Mohela’s failures led to over 800,000 public service workers facing delays in receiving federal Public Service Loan Forgiveness. Mohela has labeled the report as a “false narrative” in a statement to the Missouri Independent in March.
“Your company has contributed to student loan borrowers’ difficulties by mishandling borrowers’ return to repayment following the COVID-19 pandemic-related pause on payments, interest, and collections and by impeding public servants’ access to PSLF relief,” wrote Warren in the letter.
Giles declined the invitation to the April 10 hearing that discussed Mohela’s alleged failures. But during the hearing, Mohela was defended by Scott Buchanan, executive director of the Student Loan Servicing Alliance.
Buchanan claimed that the accusations of Mohela using a “call deflection” scheme to “harm” borrowers were “false.”
“Some suggest that the servicer developed and implemented a strategy called ‘call deflection’ and suggest they did so to harm borrowers. That is false," said Buchanan at the hearing. “In fact, [the Federal Student Aid office] mandated all servicers utilize this strategy and included it in their own playbook to servicers.”
During the hearing, Buchanan also blamed the Federal Student Aid office of mishandling Public Service Loan Forgiveness applications.
“Recent accusations suggesting servicers are responsible for a large backlog of Public Service Loan Forgiveness applications, and that the backlog is intentional, are also false,” said Buchanan. “Today, FSA makes all decisions about whether to approve or deny forgiveness, and so the vast majority of the backlog resides at a resource-constrained FSA.”
Mohela was punished by the U.S. Department of Education in October for failing to issue timely billing statements to 2.5 million borrowers, which resulted in 800,000 borrowers becoming delinquent on their loans. The department withheld $7.2 million in payments to Mohela as a result. The student loan servicer is also currently facing two class-action lawsuits over its alleged “failure to timely process and render decisions for student loan borrowers enrolled in the Public Service Loan Forgiveness program.”
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