Maldonado v. MOHELA
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On September 4, 2024, California student borrowers filed a lawsuit alleging that the Missouri Higher Education Loan Authority (MOHELA) failed to implement student loan discharges ordered by the Department of Education.
The Department of Education released these borrowers from further obligation to repay, but the lawsuit states that MOHELA, one of the largest federal student loan servicers in the United States, never processed the discharges, never issued authorized refunds to the borrowers, continues reporting the debts to credit reporting agencies as current obligations, and has been illegally demanding payments from the student borrowers.
Borrowers are demanding that their loan discharges be implemented immediately and that MOHELA immediately stop its inaccurate treatment and reporting of their accounts.
On April 9, 2025, the U.S. District Court for the Northern District of California denied MOHELA’s motion to dismiss the complaint. On May 9, 2025, the court set a hearing on the Plaintiffs’ forthcoming motion for class certification for January 22, 2026. That same day, MOHELA filed a motion for judgment on the pleadings, again asking the court to dismiss the complaint. Plaintiffs will file their opposition to that motion on June 6, 2025.
About Maldonado v. MOHELA
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Student borrowers from California have sued federal student loan servicer MOHELA for its failure to process student loan discharges ordered by the Department of Education.
Between April 2022 and May 2024, the Department announced group discharges for former students from six predatory for-profit institutions (Marinello Schools of Beauty, Corinthian Colleges, ITT Technical Institute, Westwood College, the Art Institute, and Colorado-based campuses of College America) and notified borrowers that they did not need to take any further action. However, many borrowers continue to receive collection notices and hold federal student loan balances with MOHELA years after the Department of Education canceled their loan obligations.
Borrowers are demanding that their loan discharges be implemented immediately and that MOHELA immediately stop its inaccurate treatment and reporting of their accounts.
The case was filed in Alameda County Superior Court on September 4, 2024, and removed to the U.S. District Court for the Northern District of California on November 8, 2024.
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September 4, 2024: Plaintiffs file their complaint in the Alameda County Superior Court.
November 8, 2024: MOHELA removes the lawsuit to federal court in the Northern District of California.
December 20, 2024: MOHELA files a motion to dismiss plaintiffs’ lawsuit.
April 9, 2025: The court denies MOHELA’s motion to dismiss.
May 9, 2025: MOHELA files a motion for judgment on the pleadings.
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Between April 2022 and May 2024, the Department announced group discharges for former students from six predatory for-profit institutions: Marinello Schools of Beauty, Corinthian Colleges, ITT Technical Institute, Westwood College, the Art Institute, and Colorado-based campuses of College America.
The group discharges came after the Department found that the schools engaged in rampant misconduct, including the “financial exploitation of students” and “widespread misrepresentations.”
The Department then contacted affected student borrowers to tell them that their loans would be discharged. The notices, and the Department’s public statements, informed borrowers that they did not need to make any further payments on their loans and that they did not need to take any further action.
Despite the Department’s public announcements about the student loan discharges, and despite receiving a slew of complaints from student borrowers, MOHELA allegedly refuses to implement the discharges.
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September 4, 2024: Complaint
November 8, 2024: Defendant’s Notice of Removal of Action
December 20, 2024: Defendant’s Motion to Dismiss Complaint and Strike Class Definition
January 21, 2025: Plaintiffs’ Opposition to MOHELA’s Motion to Dismiss and to Strike Class Definition
February 7, 2025: Defendant’s Reply in support of Motion to Dismiss and to Strike Class Definition
April 9, 2025: Order Denying MOHELA’s Motion to Dismiss
April 23, 2025:Defendant’s Answer and Affirmative Defenses To Complaint
May 9, 2025: Defendant’s Motion for Judgment on the Pleadings
“I walked into Heald with a goal of bettering myself and instead fell into a Venus flytrap. For years, I assumed this debt would loom over my head for the rest of my life. When the Corinthian group discharge was announced, it felt like a huge weight was lifted — they told us we didn’t have to do a thing and our loans would be canceled.
Two years later, I’m still fighting for answers and the relief I was promised, wondering if this was just another trap.”
— Jaime Maldonado, a plaintiff who attended Heald, a Corinthian school
“The Department of Education sent a letter saying my ITT loans would be canceled and no action was needed, but instead I’ve spent hours going back and forth between MOHELA and the Department trying to sort through their incompetence. These loans are invasive and affect every aspect of your life – my wife and I have even put off having kids because of this debt.
I keep hearing in the news about the Department approving more discharges, but we still haven’t seen ours. They can’t keep messing with people’s lives and making empty promises.”
— Jeff Plamondon, a plaintiff who attended ITT Technical Institute
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