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Most federal student loan borrowers who are pursuing a public service loan have faced some confusion and frustration along the way.
The program, which allows people working for the government or specific nonprofit organizations to cancel their debt after 10 years, has been plagued by problems. Borrowers have complained of misleading timelines, miscommunication, and confusing requirements of which they were not fully aware.
Therefore, they may now be a little nervous about the news that the government will soon combine them with another lending company.
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Here’s what you need to know about the upcoming change and what experts say you can do to make it go as smoothly as possible.
Your new carrier is MOHELA
Until recently, borrowers pursuing public service loans had their accounts processed with Pennsylvania Higher Education Support Agency, also known as FedLoan. But FedLoan, which has processed the loans of 8.5 million student loans, announced last year that it would not renew its contract with the federal government.
Your new service provider will be MOHELA, or the Missouri Higher Education Loan Authority.
“Even though your server’s name is changing, nearly every part of your post-conversion experience will remain the same,” Scott Buchananexecutive director of Student Loan Servicing Alliance, a trade group for federal student loan service providers.
Service transition is happening ‘in batches’
Buchanan said the transition has already taken place.
“Some borrowers have already switched to their new service provider, and others are in the process of being processed in the coming months,” he said.
“We’re making this transition in batches to minimize any consumer issues.”
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Track mail, email with next steps
Borrowers should be sure to read all letters and emails from their servicer, Buchanan says. “We don’t send out communications without a reason, and it’s important to know if there’s any action you need to take.”
Expect to have to set a new password to log into your new account and update your bank details, and possibly your debit card information, if you’re signed up for automatic payments. (Keep in mind that most federal student loan payments remain on hold until at least September, and months that pass during the pause will count toward your timeline for forgiveness. things even if you don’t pay.)
Since so many borrowers pursuing a public service loan complain that their number of eligible payments has been overcharged, you’ll want to check your payment amount before moving to MOHELA if you still have time, says higher education expert Mark Kantrowitz.
“Download a list of all your eligible payments,” he says, and then compare it to the post-transfer payment amount.
“If they are different, identify the source of the difference,” added Kantrowitz. You will want to notify MOHELA as soon as possible.
