UNITED STATES – APRIL 18: Education Secretary Miguel Cardona testifies about student loans in the course of the … [+]
The Biden administration announced this week that a million borrowers with federal student loans will soon be transferred from MOHELA, one in every of the Education Department’s largest contractors. Affected borrowers will soon have a brand new student loan provider. This will change how and to whom borrowers make their monthly payments.
This service change follows one other major transition because the Department of Education shifts public service loan administration from MOHELA to StudentAid.gov. During the transition period, borrowers will now now not have access to their PSLF data and is not going to receive student loan forgiveness until the transfer is accomplished later this summer.
Ultimately, these changes to student loan processing could have a big impact on thousands and thousands of borrowers looking for loan forgiveness or just making their payments. Here’s a breakdown.
The transfer of student loan servicing will impact 1 million borrowers
This week, the Department of Education’s Office of Federal Student Aid announced that many borrowers whose federal student loans are currently serviced by MOHELA shall be transferred to other contracted loan servicers.
“As part of this ongoing work to improve borrowers’ experiences, FSA will begin this week transferring a portion of MOHELA borrower accounts to other federal student loan servicers,” the department said in a brand new announcement blog entry. “Another servicer will begin servicing these loans and support these borrowers so that they can benefit in a timely manner from the improvements that will be implemented this summer.” Borrowers affected by the transfer will find yourself with one in every of the department’s other servicers resembling Aidvantage, Nelnet or EdFinancial.
“MOHELA has requested these transfers,” the department said. “As part of its work to ensure borrowers receive the best service and support, the FSA has agreed to this route. The FSA has begun working with MOHELA and other loan servicers to carry out these transfers.”
Borrowers must be informed of any changes to the loan process. Importantly, transfers of loan servicing under the Department of Education’s federal student aid system don’t change loan ownership, underlying terms and conditions, or eligibility for federal repayment and student loan forgiveness programs. The loans remain government-administered student loans with access to all the same programs. However, once the transfer is complete, borrowers must create a brand new online account with the brand new service provider. And they might need to revive their payments.
“Borrowers who change servicers will receive a notice from MOHELA and their new servicer with instructions on the steps they must take,” the department said. This includes making a recent online account, updating contact information and entering banking information or changing automatic payment settings.
Changes to PSLF support will pause student loan forgiveness
Meanwhile, the Department of Education this week began a long-planned service change for the PSLF program. The department is moving PSLF care from MOHELA to the StudentAid.gov platform. During this transition, which began May 1, borrowers will lose all access to their PSLF data, including details about qualified PSLF payments. No PSLF employment certification forms shall be processed and borrowers is not going to receive student loan forgiveness under the PSLF program.
The transition is predicted to be accomplished in July this 12 months. At that point, borrowers should give you the chance to regain access to their PSLF data through a brand new dashboard on StudentAid.gov. The Department of Education may even resume processing student loan forgiveness applications.
Importantly, while the PSLF capabilities of borrowers’ MOHELA accounts shall be transferred to StudentAid.gov, some borrowers will proceed to retain MOHELA as their loan servicer. This implies that these borrowers must proceed to make payments on their student loans to MOHELA as required, even while their PSLF information is transferred to StudentAid.gov.
However, there are some borrowers who could also be affected each the PSLF transition And the MOHELA service transfer. These borrowers will each have their servicing transferred to a brand new loan servicer (Aidvantage, EdFinancial or Nelnet) and have their student loan forgiveness information for the PSLF program transitioned to StudentAid.gov.
Other upcoming student loan forgiveness and repair changes
The Department of Education may implement additional changes to student loan processing in the approaching months. This may impact other student loan forgiveness and repayment programs and lots of more borrowers.
The Total and Permanent Disability Discharge Program, which provides loan forgiveness to borrowers who’re unable to work as a result of a medical condition, is currently administered by Nelnet. However, the department expects TPD discharge services to transition from Nelnet to StudentAid.gov later this fall, through the same process to the PSLF transition.
“As borrowers transition over the next few months, they will be contacted by their new servicer with additional information and will ensure all necessary steps are taken to ensure the borrower has their payment and contact information up to date,” the department said.
