For-profit college students sue MOHELA over debt forgiveness delays

For-profit college students have filed a lawsuit against the Missouri Higher Education Loan Authority (MOHELA) in Alameda County, California, alleging that the agency has failed to implement promised loan discharges for defrauded borrowers. Despite the Department of Education announcing debt relief over two years ago, many borrowers, including those from Corinthian Colleges, continue to receive payment demands and have their canceled debts reported to credit bureaus. The lawsuit claims that MOHELA's actions have caused significant distress to borrowers who were assured their loans would be forgiven without further action required on their part. The plaintiffs, including Jaime Maldonado, express frustration over the handling of their loans, which were supposed to be discharged as part of a broader initiative to provide relief to victims of predatory lending practices. The lawsuit highlights the disconnect between the Department of Education's promises and MOHELA's failure to comply, raising concerns about the effectiveness of profit-driven loan servicers in managing student debt relief programs. In response to the allegations, MOHELA has stated that it will vigorously defend itself against what it calls false claims. Meanwhile, the Department of Education has refrained from commenting on the ongoing litigation, which underscores the challenges faced by borrowers seeking justice and relief from their student loans. This situation poses a significant challenge for policymakers and advocates, particularly as the upcoming election approaches. The handling of student debt relief is a critical issue, and the failure of MOHELA to process discharges could impact public perception of the government's commitment to supporting defrauded students.