If you are one of the thousands of student loan borrowers currently using the service MOHELA, we have some news for you. According to a recent exchange between Senator Elizabeth Warren and Secretary of Education Linda McMahon, the Department of Education is planning on moving an unknown number of MOHELA borrowers to other lenders by the end of the year. This news comes after it was announced in June that people using MOHELA for their income-driven repayment (IDR) plans might have to reapply due to an unexpected amount of account closers. We have everything borrowers need to know about this switch-up, including what to do if your account is one of the accounts expected to be moved.
What to know about the MOHELA student loan changes
Over the past couple of days, several news organizations have reported that MOHELA—short for Missouri Higher Education Loan Authority—will be transferring thousands of its already in-use student loan accounts to various loan services later this year.
“FSA [Federal Student Aid] is prioritizing efforts to improve customer service to students and parent borrowers,” Sarah Ursprung, the Acting Assistant Secretary for Legislation and Congressional Affairs at the Department of Education, wrote in a letter sent to Senator Warren last month, per Forbes. “FSA is collaborating with MOHELA to help the servicer manage the multiple strains on its portfolio to help drive overall improvement. As part of these efforts, FSA intends to transfer a portion of MOHELA’s PSLF [Public Service Loan Forgiveness] portfolio to other servicers later this year.”
In the past, MOHELA has received public scrutiny over the way they have handled student loans. Most recently, the lender sent out letters with incorrect information on interest accrual, and in the past, they have been known to send out incorrect billing statements to their account holders.
These errors were called out in the letters sent by McMahon and Warren, with the former writing “You also disclosed that ED [The U.S. Department of Education] will be moving some of the Missouri Higher Education Loan Authority’s federal student loan portfolio to other servicers later this year, a process that the Biden Administration set into motion given MOHELA’s abysmal performance.”
“You admitted that you were doing so to improve MOHELA’s performance, and I appreciate your acknowledgement and action—to my knowledge, the first such admission from the Trump Administration—in response to MOHELA’s failures to adequately serve borrowers.”
As of publication, there is no official word on when MOHELA will be moving the accounts over, just that it will happen by the end of the year. There is also no word on whose accounts will be moved or where they will be moved to.
What to do if your student loan account gets moved
According to the Student Aid website, when someone’s loan is moved, borrowers get an email from their lender 2 weeks in advance. This email details where the loan is being transferred and how to contact the new lender.
Once your student loan account gets moved, the website says that you “will need to contact the new servicer to reinitiate some services related to your account.”
“After the transferred loans have been fully loaded to the new servicer’s system, the new servicer will send you information that explains how to establish account access online and sign up for other services (such as web payments, electronic correspondence, and, if necessary, auto pay).”
Student Aid also warns that once the transfer is complete, there might be some changes made to your credit report. If that’s the case, they recommend submitting a dispute to a credit reporting company.
For those with further questions, Student Aid recommends submitting a complaint to the U.S. Department of Education’s Office of Federal Student Aid directly. You can do that here.
