U.S. Senators Elizabeth Warren (D-MA), Richard Blumenthal (D-CT), Chris Van Hollen (D-MD), and Tammy Duckworth (D-IL) recently sent a letter to Scott Giles, Higher Education Loan Authority of the State of Missouri (MOHELA) executive director and CEO, expressing dismay over the company locking more than 8 million student loan borrowers into an abusive “terms of use” agreement.
The company requires all borrowers that sign up for an account on the MOHELA website acknowledge that they agree with the terms of use.
The terms of use may be unlawful under the Consumer Financial Protection Act and other consumer financial laws. They makes no warranty or guaranty that the website or its content is accurate or reliable. They also prohibit borrowers from sharing website content and restrict borrower’s legal rights, absolving MOHELA of liability.
“The exploitative nature of MOHELA’s terms of use is particularly insidious because borrowers do not have the choice to simply opt out,” the senators wrote. “We are alarmed by the exploitative nature of these new Terms of Use — particularly given MOHELA’s poor record supporting borrowers — and are concerned that they could potentially violate federal law.”
In October, the U.S. Department of Education issued a MOHELA contract violation notice and stopped the assignment of new borrower accounts to MOHELA.