The Biden administration recently announced that a million borrowers with federal student loans will be transferred from MOHELA to other loan servicers. This move aims to improve borrowers’ experiences and ensure they receive the best service and support. Borrowers impacted by the transfer will need to create a new online account with the new servicer and may need to re-establish payments. The transition will not change ownership of the loans or eligibility for federal repayment and student loan forgiveness programs.
In addition to the student loan servicing changes, the Education Department is also moving Public Service Loan Forgiveness (PSLF) servicing from MOHELA to StudentAid.gov. During this transition, borrowers will lose access to their PSLF data, and no forgiveness applications will be processed until the transfer is complete. The transition is expected to finish in July, at which point borrowers should regain access to their PSLF data through a new dashboard on StudentAid.gov.
Some borrowers will continue to have MOHELA as their loan servicer even after the PSLF servicing transfer, meaning they must continue making payments as required. However, borrowers who are impacted by both the PSLF transition and the MOHELA servicing transfer will see their student loan forgiveness data transferred to StudentAid.gov while also being transferred to a new loan servicer. This may create some confusion for borrowers, but the Education Department is working to ensure a smooth transition for all impacted borrowers.
The Education Department is also planning to make changes to other student loan forgiveness and repayment programs, potentially impacting even more borrowers in the future. The Total and Permanent Disability discharge program, which offers loan forgiveness to borrowers unable to work due to a health condition, is currently administered by Nelnet. However, the department anticipates transitioning TPD discharge servicing to StudentAid.gov later this fall, following a similar process as the PSLF transition.
As these changes are implemented, borrowers will be contacted by their new servicer with more information and instructions on updating their payment and contact information. It is crucial for borrowers to stay informed and follow the necessary steps to ensure a smooth transition to their new loan servicer and access to their student loan forgiveness data. Overall, these changes are aimed at improving the borrower experience and ensuring better service and support for millions of federal student loan borrowers.
