A teachers union is suing a major Missouri-based student loan company, claiming it misled millions of borrowers.
On Monday, the American Federal of Teachers filed a lawsuit against the Missouri Higher Education Loan Authority, or MOHELA, claiming that the company has failed to provide refunds and process loan relief applications, miscalculated balances, overcharged borrowers and deducted payments from borrowers' bank accounts without their permission.
"Americans - including American educators, front-line health care workers, and other public service workers - are drowning in student loan debt," the lawsuit read. "But ... instead of providing cash-strapped borrowers making payments on their student loans for the first time in three-and-a-half-years with the assistance they need, MOHELA traps eight million borrowers in a system of its own design, rife with errors, misinformation, and broken promises."
The lawsuit further accuses the MOHELA of violating consumer protection law.
"MOHELA was hired by the federal government to help borrowers pay down debt, but instead it hung them out to dry to line its own pockets," AFT President Randi Weingarten said in a statement. "Rather than fulfill its responsibilities, MOHELA has abdicated and deflected them - and it's well past time it is held to account."
The AFT represents 1.8 million public school teachers, health care workers and other public service workers across the country, many of whom qualify for the federal Public Service Loan Forgiveness program.
In May, a group of advocates and Democratic lawmakers also called on the Biden administration and U.S. Department of Education to end its contract with MOHELA, accusing it of being a predatory loan service.
A MOHELA spokesperson told Business Insider that "providing support to student loan borrowers is the utmost priority to MOHELA, and any claims to the contrary are false. MOHELA will vigorously defend against the allegations in the complaint."
