Student Loans & Servicing Failures: What Borrowers with MOHELA Should Know for Their Credit Health

When a servicer fails in that role, the result can ripple through your financial life hurting your credit health, reducing your opportunities, and exposing you to collection or reporting errors.

One servicer under intense scrutiny is MOHELA. This blog explains what’s going on, why it matters for your credit health, and what you can do as a Florida borrower to protect your rights.

What’s Going On With MOHELA?

• A Senate investigation found that MOHELA may have caused nearly two million credit reporting errors after transferring accounts without proper notice to credit-reporting agencies. Elizabeth Warren
• The American Federation of Teachers (AFT) and the Student Borrower Protection Center (SBPC) reported that MOHELA failed to send monthly bills to 2.5 million borrowers in 2023, causing some 800,000 to become delinquent simply because they never received a statement. Protect Borrowers+1
• Multiple lawsuits allege that MOHELA refused to implement loan discharges ordered by the U.S. Department of Education (ED), continued collecting on loans that were cancelled, and inaccurately reported the debts to credit bureaus. Project on Predatory Student Lending+1
• As of early 2025, it was confirmed the ED is transferring some portion of MOHELA’s portfolio to other servicers, citing performance problems and borrower harm. Newsweek+1

Why It Matters for Your Credit Health

Credit health isn’t only about timely payments and how much credit you use, it’s also about how accurately information is reported, how your servicing is handled, and whether your account is being properly managed and reflected in your credit history.

Here are the key risks when your servicer falters:

• Incorrect or duplicate information on your credit report. The Senate found MOHELA’s transfers may have caused such errors leading to lower credit scores and damaged financial reputation. Elizabeth Warren
• Unwarranted delinquencies. If you never receive a bill, you might be listed late or in default even though you tried to pay. The ED’s findings tied MOHELA to such situations. Protect Borrowers
• Loss of relief or forgiveness opportunities. If a discharge or Public Service Loan Forgiveness (PSLF) benefit is approved by the ED but not implemented by your servicer, you may continue carrying debt you shouldn’t and that debt may be affecting your credit file. Project on Predatory Student Lending
• Reporting that flows incorrectly to credit bureaus. When your servicer misreports or delays updating information, it can show wrong balances, missed payments, or transfers that damage your credit score.

For Florida borrowers, these are especially important: you rely on accurate credit reporting to qualify for housing, auto loans, personal loans, and even job opportunities. Protecting your credit health means ensuring your student-loan servicer is doing its job.

Your Rights & What to Look Out For

Under federal and Florida law, borrowers have rights and servicers have obligations. When a servicer like MOHELA fails, you may have legal remedies.

What to watch out for:

• Did you receive your monthly statements in the timeframe required?
• Is your repayment plan (including income-driven plans like SAVE) reflected correctly?
• Did you apply for PSLF or a loan discharge, and has the servicer updated your account and reported accordingly?
• Does your credit report show correct balances, account status, and payment history?
• Were you charged fees, late payments, or reported as delinquent due to servicer error?

Applicable laws and protections:

• Fair Credit Reporting Act (FCRA) Your right to accurate credit reports, and to dispute errors.
• Fair Debt Collection Practices Act (FDCPA) / Florida Consumer Collection Practices Act (FCCPA) Protections if debt collection efforts (including from student loans) are unfair or deceptive.
• Florida Deceptive and Unfair Trade Practices Act (FDUTPA) Applies if a servicer engages in misleading or unfair practices toward Florida consumers.
• Contractual and servicing-law frameworks Federal contracts between ED and servicers require certain performance standards; failure to meet them may give rise to borrower claims.

If your servicer mismanaged your loans in a way that injured your credit health (e.g., delaying discharge, reporting wrongly), you may have legal avenues to challenge the servicer and protect your credit file.

Steps to Protect Your Credit Health with Student Loans

1. Check your credit report at least annually (via AnnualCreditReport.com). Look specifically for student‐loan accounts, reported balances, payment history, and status.
2. Monitor your loan servicer communications. Keep copies of bills, notices, applications for relief or discharge, and correspondence.
3. Track your relief or forgiveness status. If you were approved for a discharge, PSLF, or other program, verify that your servicer reflected it and reported it correctly.
4. Dispute inaccuracies immediately. If your credit report shows incorrect information, send a written dispute to both the credit bureau and the servicer. Under the FCRA, you have the right to an investigation.
5. Document harm. If you were denied credit, charged higher interest, or experienced other financial harm because of servicer errors, record the details (dates, amounts, outcomes).
6. Seek legal review if you believe your rights were violated. A servicer’s error that damages your credit health can be a basis for legal action.

What This Means for You

Your student-loan servicer isn’t just a middleman, they play a critical role in how your debt is managed, how your payments are tracked, and how your obligations are reported. When a servicer like MOHELA fails in that role, your credit health can suffer through no fault of your own.

If you’re in Florida and either:

• believe your student-loan account was mismanaged,
• are seeing incorrect reporting or an unexpected collection, or
• applied for relief/discharge and it still shows on your credit report

then you may have rights under federal and state law to challenge the servicer, fix your credit report, and protect your financial future.

At Consumer Rights Law, PLLC, we help borrowers preserve their credit health by holding servicers accountable, correcting reporting errors, and enforcing your consumer rights. Let us review your situation and help you take the next step.

📍 Consumer Rights Law, PLLC

848 Brickell Avenue, Penthouse 5-G97

Miami, FL 33131

📞 (786) 250-2566 ✉️ help@consumerrights.law

🌐 www.consumerrights.law

This post is for informational purposes only and does not constitute legal advice. Reading this material does not create an attorney-client relationship. Results vary depending on specific facts and circumstances. Consumer Rights Law, PLLC is a Florida law firm located in Miami, Florida.