Student-loan borrowers should no longer be serviced by a major company that's been scrutinized for bad behavior, a group of Democratic lawmakers and advocates say: 'It's time to fire MOHELA'

The Education Department has already punished MOHELA, but Rep. Ilhan Omar said that "it is time to take every single borrower off their roster."

• A group of Democratic lawmakers and advocates called on the Education Department to end MOHELA's contract.
• They cited servicer failures, including inaccurate billing, as reasons the company should no longer service borrowers.
• The Education Department has already withheld pay from MOHELA for failing its obligations.

Less than a year into the return to student-loan repayment, some Democratic lawmakers and advocates have seen enough: They want the Education Department to fire servicer MOHELA.

One month after federal payments started back up again in October after an over three-year pause, MOHELA — which services about 8 million borrowers — was the first servicer to have its pay withheld after the Education Department found it failed to send on-time billing statements to over 2 million borrowers.

Since then, borrowers have continued to cite issues with the company, including hourslong hold times to reach customer service. Some borrowers have even been notified by MOHELA that the loan forgiveness they received last year was reversed due to the company's errors.

That's why, on Wednesday, a group of Democratic lawmakers — including Reps. Ayanna Pressley, Ilhan Omar, Greg Casar, and Sen. Ed Markey — joined advocates in calling for the Education Department to end MOHELA's federal contract.

"It is time to stop their contract. It is time to fire them. It is time to listen to the borrowers that have been speaking up about the struggles that they are facing and it is time for us to do the right thing," Omar said during a press conference. "We are asking the administration to take this step forward because it is past time that we listen to the borrowers that have been suffering under the incompetence of MOHELA."

Business Insider first reported in April that the Education Department was transferring over 1 million borrowers from MOHELA to new servicers, with Federal Student Aid saying that MOHELA "requested these transfers and FSA, as part of its work to ensure borrowers receive the best service and support, agreed to this"

Pressley said that she applauds those transfers, but millions of borrowers remain under MOHELA's contract, and that should not be the case.

"Enough is enough. Terminate MOHELA's contract and put loan services on notice: we will not tolerate your negligence and exploitation; we will not let you profiteer off vulnerable student borrowers," Pressley said.

The Education Department did not immediately respond to a request for comment from BI. A MOHELA spokesperson told BI that "borrowers are not better off when outside groups spread false and misleading information about our work as a federal contractor for FSA. We remain committed to continuing to provide the highest quality of customer service to the borrowers that we serve."

In April, Massachusetts Sen. Elizabeth Warren held a hearing investigating MOHELA and its management of the Public Service Loan Forgiveness program. While she invited MOHELA's CEO Scott Giles to testify before the Senate, the company declined on his behalf, instead offering private briefings to address any lawmakers' concerns.

Prior to the April 10 hearing, MOHELA said it has already been "actively engaged in conversations with the Subcommittee and has offered its cooperation in addressing any questions and concerns by participating in a series of bipartisan briefings on the identified areas of interest about student loan servicing."

Meanwhile, the Education Department has vowed to oversee all servicers, and it withheld pay for the remaining servicers in January because they failed to fulfill some of their obligations.

But Democrats have focused in on MOHELA — and they want it to go.

"There's an old saying, 'Never attribute to malevolence what is merely due to incompetence.' Well, MOHELA is both incompetent and malevolent in the way in which they have been handling the responsibility of young people's lives and their ability to plan for their future," Markey said. "It is time to fire MOHELA."