Working toward government loan forgiveness? They have a new student loan service provider – CNET | Vette Leader

What’s happening

Earlier this summer, MOHELA began serving as the student loan administrator for borrowers under the Public Service Loan Forgiveness program.

Why it matters

Former service provider PHEAA had been accused of mismanaging accounts and preventing borrowers from obtaining loan forgiveness. Some of these borrowers can now reapply for forgiveness through a PSLF waiver.

What’s next

You will be notified before and after your account is transferred. You will then receive instructions on how to log into your new MOHELA account.

When you are enrolled Government loan forgiveness program, you have a new student loan service provider this summer. Approximately 2 million state student loans are being phased out from FedLoan Servicing – operated by the Pennsylvania Higher Education Assistance Agency, also known as PHEAA – to the Missouri Higher Education Loan Authority, or MOHELA.

This change comes after PHEAA announced last year that it was ending its contract with the government and handing over federal loans to various contractors. Some federal student loan borrowers have already seen their loans transferred aid, EdFinancial and Nelnet. MOHELA will now manage 2 million student loans that qualify for PSLF, a program that forgives student debt for eligible teachers, firefighters, nurses and other public employees who make 120 qualifying payments.

Federal Student Aid says borrowers don’t need to take any action of their own, and remittances to MOHELA will continue throughout the summer.

A number of other changes are expected for federal borrowers in the coming period. On August 31st, the federal loan payment pause shall end. If the moratorium is not extended again, around 42 million borrowers will have to resume regular payments on their student debt. For those enrolled in PSLF who have previously been rejected for forgiveness, October 31st is the deadline to apply for the so-called Limited PSLF Waiver, which would allow a larger number of public sector borrowers to retrospectively count loan payments and re-apply for relief.

If you are enrolled in the PSLF program, here’s what you need to know about why your credits are being deferred, when this is happening, and what that means for your forgiveness status.

Why are my student loans shifting?

PHEAA, which administers FedLoan Servicing, is officially terminating its loan services agreement with the federal government this December. In recent years it has been accused of severely manipulating PSLF loan accounts, including using inaccurate payment information, and removing borrowers’ chances of forgiveness. A limited PSLF waiver issued by the Department of Education in October 2021 offers some of these borrowers (and others) the opportunity to reapply for student loan waivers.

This isn’t the first time in recent years that a large federal loan servicer has exited the student loan industry. Navient was there at the end of last year also under fire for the mismanagement of student loans, transitioned its $5.6 million federal student loan schedule to Aid Vantage.

When will your student loans be transferred?

FedLoan Servicing has begun transitioning its student loans to MOHELA and will continue through the remainder of the summer. You may have already been notified of the change.

FedLoans will notify you of your loan transfer 15 days in advance, and MOHELA will then send you a welcome message once the transfer is complete. Federal Student Aid will also notify you before and after your student loans are deferred.

While you don’t have to do anything to transfer your student loans, you should follow the prompts to log into your new MOHELA account. Your current loan interest, terms, repayment schedule, and relief status remain unchanged. If your student loan payments are currently on hold due to payment breakstay in the queue until the freeze ends.

What About Your Student Loan Forgiveness Status?

Your current payment history will be transferred to MOHELA and count towards your 120 qualifying loan forgiveness payments.

If you are enrolled in PSLF and all of your loans are forgiven during the transfer period, they will be repaid and your account will not be transferred to MOHELA. However, because the transition takes several months, it’s possible that your loans will be transferred before you receive forgiveness. For example, your loans could be transferred to MOHELA in July before you receive student loan forgiveness in August.

If you applied to the Government Loan Forgiveness Program via the Federal Student Aid Form after May 1, 2022, your application has been forwarded to MOHELA.

Will the PSLF waiver period be extended?

The October 31 deadline to apply for the PSLF exemption is fast approaching. While there is currently no final decision on extending the waiver beyond that date, Federal Student Aid chief operating officer Richard Cordray is urging giving eligible borrowers more time to apply, he said at a financial aid conference in June.

It is advisable to apply as soon as possible, especially if you have to consolidate your loans first. If you have FFEL or Perkins loans, you’ll need to consolidate them into direct loans before you can apply for the waiver – a process that can take 45 days, according to Martin Lynch, director of education at Cambridge Credit Counseling. You should consolidate by early September to give yourself plenty of time to apply for the exemption.

What other changes are there in Student Loan Payments and Forgiveness?

This move to student loans is just one of the notable changes in student loans since the pandemic began. Federal student loan repayments have been suspended for more than two years, and the pause could be extended again.

More than 1.6 million borrowers have had their student loans forgiventotal over $32 billion, as of 2021. And while President Joe Biden continued his campaign widespread student loan forgivenessthis promise didn’t get any real traction.

Leave a Comment