MOHELA Class Action, Borrowers Sue Over Overcharges, Ignored Discharges, and PSLF Delays

Three separate class action lawsuits allege that MOHELA — one of the nation’s largest federal student loan servicers — overcharged borrowers, refused to process court-ordered loan discharges, and deliberately delayed Public Service Loan Forgiveness applications. The lawsuits, filed between February 2024 and July 2024, remain active with no settlements reached as of March 2026.

Quick Facts

What Actually Happened?

MOHELA is one of the largest servicers of federal student loans in the United States, handling millions of borrower accounts including those enrolled in Public Service Loan Forgiveness and income-driven repayment plans. Millions of borrowers — teachers, nurses, government workers — trusted MOHELA to accurately manage their path to loan forgiveness after years or decades of qualifying payments.

Three separate lawsuits now allege that MOHELA failed those borrowers in fundamental ways. The American Federation of Teachers filed the first case in DC Superior Court in July 2024, alleging a pattern of illegal overcharges and misleading account statements. The amended complaint, filed January 15, 2026, claims MOHELA’s misconduct continued throughout all of 2025.

Two federal lawsuits followed. Maldonado v. MOHELA, filed September 4, 2024 in the Northern District of California, and Morgan v. MOHELA, filed February 2024 in the Eastern District of Missouri, each target a different category of alleged harm — unprocessed discharges and stalled PSLF applications, respectively.

What Does the Lawsuit Allege?

The AFT lawsuit alleges MOHELA illegally overcharged borrowers, failed to process their paperwork in a timely manner, and actively misled borrowers about the status of their accounts. The amended complaint filed in January 2026 alleges these practices continued throughout 2025 even after MOHELA was aware of the litigation.

Maldonado v. MOHELA claims MOHELA failed to implement student loan discharges that the U.S. Department of Education had already ordered for borrowers who attended predatory for-profit colleges. According to the complaint, MOHELA never processed those discharges — meaning borrowers who legally qualified for loan cancellation remained on the hook for balances that should have been erased.

Morgan v. MOHELA alleges MOHELA unreasonably delayed processing PSLF applications for public service workers — including teachers, nurses, and government employees — who submitted qualifying applications and received no decision for months or years. The complaint claims borrowers who followed every rule were forced to keep making loan payments while their applications sat unprocessed.

What Laws Were Allegedly Violated?

• Consumer Financial Protection Act — Federal law prohibiting unfair, deceptive, or abusive acts by financial services companies. The AFT alleges MOHELA’s overcharges and misleading statements violated this act.
• DC Consumer Protection Procedures Act — District of Columbia law protecting consumers from deceptive business practices. The AFT alleges MOHELA violated this law through misleading billing and account communications.
• State Consumer Protection Laws — Various state-level consumer protection statutes that prohibit deceptive practices in financial services.

Who Does This Lawsuit Affect?

• You may be affected if you hold or held a federal student loan serviced by MOHELA at any point since July 2019 and experienced unexplained overcharges or billing errors.
• You may be affected if your federal student loans were discharged by the U.S. Department of Education between April 2022 and May 2024 due to school misconduct at a qualifying for-profit institution, and MOHELA never processed that discharge. (Maldonado case — California borrowers only.)
• You may be affected if you submitted a Public Service Loan Forgiveness application to MOHELA and it remains unprocessed or undecided. (Morgan case — nationwide, with New York and California subclasses.)
• You may be affected if you are a public service employee — teacher, nurse, or government worker — who has been waiting months or years for a PSLF eligibility decision from MOHELA.

No action is required right now. Save all MOHELA billing statements, payment history, correspondence, phone call logs, account screenshots, and any loan discharge notices from the Department of Education — these may matter if a settlement is reached.

What Is MOHELA Saying?

MOHELA has not issued a comprehensive public statement directly addressing all three lawsuits as of March 12, 2026. In the Maldonado case, MOHELA filed a motion to dismiss, which the Northern District of California denied on April 9, 2025. MOHELA then filed a motion for judgment on the pleadings, which the court also denied on July 8, 2025. MOHELA filed a motion for partial summary judgment on November 7, 2025.

MOHELA’s legal filings indicate the company disputes the plaintiffs’ characterization of its servicing conduct. AllAboutLawyer.com will update this section when MOHELA issues any public statement on the merits of these allegations.

What Happens Next?

• AFT v. MOHELA: The case entered discovery following the January 15, 2026 amended complaint. A next court status conference is scheduled for May 28, 2026.
• Maldonado v. MOHELA: A key hearing was scheduled for March 5, 2026. Cross-motions for partial summary judgment are pending before the Northern District of California.
• Morgan v. MOHELA: The case continues through pretrial motions in the Eastern District of Missouri.
• Class certification has not yet been granted in any of the three cases. Plaintiffs must demonstrate to each court that their claims meet the legal requirements to proceed as a class action on behalf of all affected borrowers.
• If class certification is granted, the cases could expand to cover millions of borrowers nationwide. If class certification is denied, individual claims may still proceed.

This page will be updated as the case develops.

Important Case Dates

Frequently Asked Questions

Is the MOHELA lawsuit real and legitimate? 

Yes. Three separate class action lawsuits against MOHELA are active in U.S. federal and DC courts as of March 2026. Court records are publicly available through PACER and the DC Superior Court electronic filing system. No settlement has been reached in any of the three cases.

Can I file a claim against MOHELA right now?

 No. No settlement has been reached, and no claim form is currently available. The cases are still in early litigation. You cannot submit a claim until — and unless — a settlement is approved by the court.

Do I need a lawyer to join this lawsuit? 

No. If the cases reach settlement and a class is certified, you will likely receive notice automatically if you qualify. You do not need to hire an attorney to receive relief as a class member, though you may consult one for guidance on your individual situation.

What happens if the case settles? 

If any of the three cases reaches a court-approved settlement, affected borrowers in the class will receive official notice — typically by mail or email — with instructions for how to receive their share of any relief. The court must approve the settlement terms before any money or loan adjustments are distributed.

Will I get notified if there is a settlement? 

Yes, if you fall within the class definition and the court approves a settlement, you should receive notice. To ensure you receive it, keep your contact information updated with your loan servicer and the Department of Education at StudentAid.gov.

What exactly is PSLF, and why does the delay matter? 

Public Service Loan Forgiveness (PSLF) cancels remaining federal student loan balances after 120 qualifying monthly payments for borrowers working full-time in public service. The Morgan lawsuit alleges MOHELA left thousands of applications unprocessed, forcing borrowers to keep paying on loans that should have already been forgiven.

Should I stop making payments while this lawsuit is active? 

No. Continue making your scheduled loan payments. Missing payments could harm your credit, disqualify you from forgiveness programs, or trigger collections. The existence of a lawsuit does not pause your legal repayment obligations.

What if I attended a for-profit school and my discharge was never processed?

 The Maldonado case covers California borrowers whose loans the Department of Education ordered discharged between April 2022 and May 2024 due to school misconduct. If you believe you qualify, save all discharge notices from the Department of Education and any MOHELA correspondence. Consult a student loan attorney or nonprofit counselor.

Sources & References

• AFT v. MOHELA — Federal Court Docket via CourtListener (PACER/RECAP — official court record)
• Protect Borrowers — MOHELA Litigation Updates (Plaintiffs’ nonprofit — treat as one-sided)
• American Federation of Teachers — MOHELA Lawsuit Press Release, January 16, 2026 (Plaintiffs’ organization — treat as one-sided)
• Morgan v. MOHELA — PACER, E.D. Missouri, Case No. 4:24-cv-00147 (official court record)

Consider reading this AllAboutLawyer.com’s existing MOHELA class action lawsuit 2026 article also for bit better understanding.

Last Updated: March 12, 2026

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Legal claims and outcomes depend on specific facts and applicable law. For advice regarding a particular situation, consult a qualified attorney.

About the Author

Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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