The Education Department will withhold a $7.2 million monthly payment for a major student loan processor because it failed to send out timely billing notices to millions of borrowers, the Wall Street Journal reported. The Monday move against Mohela, the Missouri Higher Education Loan Authority, comes as the government and the contractors who handle the billing and repayment program enrollment for federal student loans struggle with returning 28 million borrowers to repayment after a more than three-year pandemic-era pause. Around 2.5 million borrowers didn’t receive billing statements from Mohela according to schedule, resulting in 800,000 borrowers being placed in forbearance for their loans, the Education Department said. The payment will be made once the issues are resolved. “The actions we’ve taken send a strong message to all student loan servicers that we will not allow borrowers to suffer the consequences of gross servicing failures,” Education Secretary Miguel Cardona said. (Subscription required.)
