MOHELA Lawsuit: Where the Cases Stand and What Borrowers Can Do
Questions about this case?
AI Legal Assistant · free · answers in seconds · general information, not legal advice
MOHELA — the Higher Education Loan Authority of the State of Missouri — services federal student loans for millions of borrowers. As of September 30, 2026, two cases matter: a teachers' union lawsuit in Washington, D.C. that has been paused since March 2026 for settlement talks, and a proposed MOHELA class action in California where borrowers won a partial ruling. There is no settlement, no fund and no claim form. What you can do today is file a complaint, keep records, and make sure your repayment plan is the right one.
Editorially Reviewed — Content reviewed for accuracy using published legal research, government data, and verified court records. See our methodology
Reviewed by Leonard Goldberg, Editor · Last updated
What the Lawsuits Say MOHELA Did
The main case was brought by the American Federation of Teachers (AFT). Its amended complaint of January 15, 2026 alleges that MOHELA “traps more than 6.5 million borrowers in a system of its own design, rife with errors, misinformation, and broken promises.” The specific allegations: MOHELA fails to process Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) applications on time or at all, fails to provide refunds, miscalculates balances, overcharges borrowers, and steers callers to self-service web pages instead of a live agent — a practice the complaint calls “call deflection.” It alleges that while MOHELA was the dedicated PSLF servicer it had over one million PSLF applications outstanding, and that in October 2023 it used the wrong federal guidelines to calculate payments, causing 280,000 borrowers to overpay.
The California case, brought by borrowers, is narrower. It alleges that MOHELA never carried out loan discharges the Department of Education had already approved for former students of schools such as Corinthian Colleges, ITT Technical Institute and Marinello Schools of Beauty, never issued the authorised refunds, and kept reporting those debts to credit bureaus as current obligations.
MOHELA denies wrongdoing. It has said that claims it does not act in borrowers' interests are “simply not true” and that many of its requirements are dictated by the Department of Education.
Case Details
AFT v. Higher Education Loan Authority of the State of Missouri, No. 1:24-cv-02460, U.S. District Court for the District of Columbia. Filed July 22, 2024 in Washington, D.C.; MOHELA moved it to federal court. The claims run under the D.C. Consumer Protection Procedures Act (D.C. Code § 28-3901). The union sues on behalf of itself, its members and the general public — it is not a class action.
Maldonado v. MOHELA, U.S. District Court for the Northern District of California, Judge Vince Chhabria. Filed in September 2024 in Alameda County Superior Court and moved to federal court on November 8, 2024. The court denied MOHELA's motion to dismiss on April 9, 2025 and a second attempt to end the case on July 8, 2025. On March 10, 2026 it granted and denied summary judgment in part for each side, finding that MOHELA violated the California Student Borrower Bill of Rights, according to the Project on Predatory Student Lending.
Status: No Settlement, No Claim Form
Even if that case settles, it is not a class settlement. The complaint asks for a declaration, damages paid to the union (treble damages or $1,500 per violation), punitive damages, court orders fixing MOHELA's servicing, and relief to “restore” members and the general public. There is no class to join and no claim process in it. The California case is further along on the merits, but its proposed class is limited to California and has not been certified.
Follow this case
There's no claim deadline yet. We'll email you if a settlement opens a claim period.
Is There a MOHELA Class Action You Can Join?
Not a nationwide one. The AFT case has no class, so there is nothing to join. The proposed class in the California case covers California residents whose group discharges MOHELA allegedly failed to carry out — former students of Corinthian Colleges, ITT Technical Institute, Marinello Schools of Beauty, Westwood College, the Art Institutes and CollegeAmerica's Colorado campuses. According to a case tracker published at tateesq.com, a second summary-judgment hearing was set for October 8, 2026, and class certification was to be briefed and heard between November 20, 2026 and January 28, 2027. If a class is certified, members are notified; there is no sign-up.
For everyone else, the useful thing is a paper trail. Save billing statements, screenshots of your MOHELA account and of your loan status on StudentAid.gov, your PSLF payment counts, and the date and length of every call. Those records are what a complaint — or any later case — runs on.
Is Anyone Getting Money?
Money can still reach MOHELA borrowers, but through the Department of Education's own programmes rather than a lawsuit: refunds when PSLF or IDR forgiveness was delayed and the borrower kept paying (the AFT complaint says many are still waiting for these), refunds tied to approved group discharges (the subject of the California case), and PSLF Buyback, which lets public-service workers count past forbearance months toward PSLF by paying what their IDR payment would have been. For contrast, Navient borrowers are receiving automatic checks under a CFPB order — see Navient settlement checks. For settlements that are paying now, see open class action settlements.
MOHELA Lawsuit Timeline
- 1
June 30, 2023 — MOHELA Gives Missouri Standing at the Supreme Court
In Biden v. Nebraska (No. 22-506) the Supreme Court struck down the Biden administration's student-debt forgiveness plan. Missouri had standing because it created MOHELA as a nonprofit government corporation, and the plan would have cost MOHELA, by Missouri's estimate, $44 million a year in fees. The HEROES Act, the Court held, did not allow cancelling $430 billion of principal.
- 2
October 30, 2023 — Education Department Withholds $7.2 Million
MOHELA failed to send timely bills to 2.5 million borrowers as payments restarted; more than 800,000 became delinquent. The Department withheld a $7.2 million payment and ordered affected borrowers placed in forbearance.
- 3
July–September 2024 — Two Lawsuits Filed
AFT sues MOHELA in Washington, D.C. on July 22, 2024 under the District's consumer protection law. California borrowers file Maldonado in September 2024 over discharges the Department had approved but MOHELA allegedly never processed.
- 4
January 15, 2026 — AFT Widens Its Complaint
The amended complaint puts the number of affected borrowers at more than 6.5 million and details the PSLF backlog, missing refunds and call deflection.
- 5
March 2026 — California Ruling, AFT Case Paused
On March 10, 2026 the California court finds MOHELA violated the state's Student Borrower Bill of Rights while leaving other questions open. The AFT case is paused for settlement talks. Also on March 10, 2026, a federal court enters the judgment ending the SAVE repayment plan, settling a lawsuit Missouri and several other states brought against the Department.
- 6
As of September 30, 2026 — No Settlement
No settlement in the AFT case has been made public, the California class is uncertified, and SAVE borrowers were due to receive notices from around July 1, 2026 telling them to choose a new repayment plan. No fund, administrator or claim form exists.
Three MOHELA Traps to Watch For
Millions of frustrated borrowers and a lawsuit in the news make MOHELA's name useful to impostors:
“Claim your MOHELA settlement”
There is no settlement, no administrator and no claims site. A page asking for your StudentAid.gov login or Social Security number to “secure your share” is collecting data, not filing anything.
Paying someone to fix PSLF or your plan
Switching plans after SAVE, filing PSLF forms, requesting Buyback and opening a Federal Student Aid complaint cost nothing when you do them yourself through StudentAid.gov or your servicer. A company charging a monthly fee for this is selling a free form — and one that asks for your login takes control of your account.
“Severely past due” alarms
In August 2026 some borrowers who were current on their loans were shown MOHELA notices calling them “severely past due,” according to a case tracker published at tateesq.com, which reports that nine senators opened an inquiry on August 27, 2026. Scammers copy exactly this kind of message. Do not call a number or click a link in the notice; log in to StudentAid.gov yourself, check your loan status there, and compare it with your MOHELA account.
MOHELA Lawsuit — Questions Borrowers Ask
Is there a MOHELA class action I can join?
Not a nationwide one. The AFT lawsuit is not a class action. The California case (Maldonado) seeks a class of California residents whose approved group discharges MOHELA allegedly failed to process, and that class has not been certified. Nobody joins a class by signing up; if one is certified, members are notified.
Is there a MOHELA settlement or claim form?
No. As of September 30, 2026 there is no settlement, fund, administrator or claim form. The AFT case has been paused since March 2026 for settlement talks, but no agreement has been made public.
What does the AFT lawsuit against MOHELA claim?
That MOHELA violated the D.C. Consumer Protection Procedures Act by mishandling PSLF and IDR applications, withholding refunds, miscalculating balances, overcharging borrowers and deflecting calls. The amended complaint says more than 6.5 million borrowers are affected. These are allegations; MOHELA denies them, and no court has found them true.
Why did the Education Department withhold $7.2 million from MOHELA?
Because when payments restarted in 2023, MOHELA failed to send timely bills to 2.5 million borrowers, and more than 800,000 of them became delinquent. The Department announced the withholding on October 30, 2023 and ordered the affected borrowers placed in forbearance.
What does MOHELA have to do with the Supreme Court student-loan case?
Procedurally, everything. In Biden v. Nebraska, decided June 30, 2023, Missouri's right to sue rested on MOHELA: the state created it, and the forgiveness plan would have cost it, by Missouri's estimate, $44 million a year in fees. The Court treated that harm as a direct injury to Missouri and struck the plan down.
I was in SAVE and MOHELA services my loans. What now?
SAVE is ending: on March 10, 2026 a federal court entered the judgment the Department requested under its settlement with Missouri and several other states. Servicers were to start sending notices on or around July 1, 2026, and the National Consumer Law Center's borrower-assistance project said borrowers would likely have 90 days from then to choose a new plan; anyone who does not choose is moved automatically, likely into the Standard plan. The date that binds you is the one in your own notice. The new Repayment Assistance Plan (RAP) was set to open July 1, 2026. Months in the SAVE forbearance do not count toward PSLF, but PSLF Buyback can recover them.
Was MOHELA part of the Nelnet data breach settlement?
No. The Nelnet data breach settlement covers a 2022 breach at Nelnet Servicing that affected borrowers whose loans were serviced by Edfinancial or OSLA. Its claim deadline, March 5, 2026, has passed. It is a different company and a different lawsuit.
What can I do right now if MOHELA made a mistake on my account?
Open a case with the Department of Education's Federal Student Aid Feedback Center, which handles discharge and forgiveness problems, payment-plan enrollment and loan-status errors, aims for resolution within 60 days and lets you escalate if you disagree. You can also file with the CFPB or by phone at (855) 411-2372; most companies respond within 15 days, and you generally cannot file a second complaint about the same problem, so include everything the first time. If no repayment plan can make your loans workable, bankruptcy is a separate and harder route — see student loans in bankruptcy.
Separate from this case: were you injured in the last 2 years?
Class-action payouts are fixed amounts through an administrator. A personal injury claim is a different case — and often worth far more. Free estimate, no obligation.
Related Consumer Brand Lawsuits
Navient Settlement Checks
CFPB order: automatic checks to harmed borrowers since February 2026
Student Loans in Bankruptcy
The undue hardship test and what changed in 2022
Open Class Action Settlements
Settlements taking claims now, with their deadlines
Class Action Payout Calculator
Estimate what a settlement share may be worth