Did MOHELA Falsely Say Your Student Loans Were Past Due?

MOHELA warned some student loan borrowers that they were severely past due even though they owed nothing.

Sens. Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) are leading the investigation, joined by Bernie Sanders (I-Vt.) and six other Democrats.

The investigation centers on allegedly erroneous delinquency notices sent in early August by MOHELA, one of the largest companies the federal government pays to manage student loan accounts. The senators gave the company until Sept. 10, 2026, to answer their questions.

Some notices threatened wage garnishment and default. Others presented borrowers with phantom bills exceeding $10,000, the senators said.

Senators Want to Know Whether Borrowers Paid Money They Never Owed

The senators want MOHELA to show its work: How many borrowers received false notices? How big were the phantom bills? And how many people have been told the notices were wrong?

But one question looms over all the rest: Did anyone believe the warning and pay money they never owed?

The senators said weakened federal oversight helped set the stage for the mistake and called on the Education Department to bring back the servicer oversight team they said the Trump administration eliminated.

A March 2026 GAO report found that staffing shortages had halted reviews of servicer accuracy and call quality in February 2025, allowing errors that could affect borrowers’ bills and repayment statuses to go undetected.

The senators accused the administration of looking the other way when servicers fail and leaving borrowers to suffer the consequences.

False Notices Landed on Accounts With Nothing Due

The problem became public over the first weekend of August. Borrowers with loans serviced by MOHELA reported receiving notices saying their loans were severely past due even though their accounts showed $0 due under an existing forbearance, Forbes reported on Aug. 4.

Many of the reports involved borrowers whose loans were in forbearance under the now-ended SAVE plan. Those borrowers were already being encouraged to select a new repayment plan.

The College Investor compiled borrower reports of phantom balances ranging from around $2,000 to more than $6,700.

One borrower reported receiving three emails from MOHELA within 30 minutes. One warned of default, another said the borrower was 210 days delinquent and the third reminded them about an upcoming payment.

MOHELA told Forbes it was reviewing the problem after customers “raised concerns indicating they received inappropriate delinquency notifications.”

An Education Department spokesperson told Business Insider that the problem affected “a small number of borrowers at one servicer” and had been fixed.

The senators weren’t convinced.

“It is currently unclear how many borrowers received these false notices, whether any borrowers paid the incorrect amounts, and to what extent the issue has been fixed,” they wrote.

MOHELA Has Been Here Before

In October 2023, the Education Department withheld $7.2 million in payments from MOHELA after the servicer failed to provide timely billing statements to 2.5 million borrowers.

More than 800,000 borrowers became delinquent because of the failure, according to the department.

The senators also cited allegations that MOHELA incorrectly reported nearly 2 million loan transfers to credit bureaus in 2023.

The latest problem also comes during a consequential transition for more than 7 million borrowers moving out of the SAVE plan.

The 90-day clock began ticking July 1 for the first affected borrowers, but not everyone has the same deadline. MOHELA is sending notices in waves through October, which means there is no single deadline for everyone.

Borrowers who fail to choose a plan on time will generally have one chosen for them: either the Standard Repayment Plan or the new Tiered Standard Plan, depending on when their loans were disbursed. Those payments could be substantially higher than what borrowers paid under SAVE.

Check Your Credit Reports, Even If Your Account Looks Fixed

MOHELA generally begins reporting a federal student loan as delinquent once it is at least 90 days past due.

Some of the erroneous notices claimed borrowers were more than 90 days delinquent. The available reports, however, do not establish that MOHELA furnished those incorrect delinquency statuses to the credit bureaus.

Borrowers concerned about possible credit-reporting errors can review their reports from the three major credit bureaus for free at AnnualCreditReport.com. If a report contains a late payment or delinquency that appears inaccurate, dispute it with the credit bureau and MOHELA.

If you made a payment in response to an incorrect “past due” amount, contact MOHELA in writing and ask it to review the payment and explain how it will correct the account or provide a refund. Keep copies of the notice, account records, payment confirmation and all correspondence.

If MOHELA does not make things right, borrowers can take the problem to Federal Student Aid and the Consumer Financial Protection Bureau. Keep a paper trail of every complaint and supporting record.

And don’t let the confusion run out the clock on your SAVE deadline. Check the date in your notice and choose a new repayment plan within 90 days, or you may end up with one you did not pick.

The big question is whether the false notices only set off alarm bells or persuaded someone to pay money they never owed.