Here’s what your new student loan manager means for student loan forgiveness.
Here’s what you need to know — and what it means for your student loans.
Millions of student borrowers may soon have a new student loan servicer – the company that handles your student loan payments and functions as customer service for your student loans. For example, about 2 million student borrowers seeking loan forgiveness from the civil service will get new student loan service starting this month. If you are enrolled in Public Service Loan Forgiveness, FedLoan Servicing will no longer service your federal student loans. Instead, meet MOHELA, who will be your new student loan manager. You may have a ton of questions regarding this important change. So let’s go ahead and get your questions answered.
Who is MOHELA?
MOHELA is the Missouri Higher Education Loan Authority and is a major student loan servicer.
When will MOHELA become my student loan manager?
If you have federal student loans and would like to obtain loan forgiveness from the public service, MOHELA will become your new student loan servicer in July 2022. The U.S. Department of Education will transfer student loans from FedLoan Servicing to MOHELA at beginning July 1, 2022. Federal Student Aid will notify you in writing before your student loans are transferred. Until you are notified, you must continue to make student loan payments to FedLoan Servicing. After the transfer, you will make student loan payments directly to MOHELA. If you use autopay, update your banking information to reflect the student loan officer change.
Why is MOHELA my new student loan manager?
FedLoan Servicing has terminated its student loan servicing contract for federal student loans under the Public Service Loan Forgiveness program with the U.S. Department of Education. The US Department of Education has appointed MOHELA as the new student loan manager for the Civil Service Loan Forgiveness Program.
What action should I take now?
You don’t have to do anything about your new student loan officer. The US Department of Education will automatically transfer your federal student loans from FedLoan Servicing to MOHELA.
Will the interest rate on my student loans change?
Transferring your federal student loans from PenFed to MOHELA will not change the interest rate on your student loans. Why? Federal student loans have fixed interest rates, which means you will have the same interest rate for the duration of your student loan. Currently, federal student loan repayments are suspended until August 31, 2022. Your regular interest rate from before the suspension of student loan repayments will apply when student loan repayments resume. How about borrowing new federal student loans? Your interest rate will be higher if you take out a new federal student loan. Why? The Federal Reserve has raised interest rates several times this year, so you should expect higher interest rates on student loans starting July 1. That said, the good news is that Biden has offered to cut student loan interest.
Will the Limited Student Loan Forgiveness Waiver be extended?
The limited student loan forgiveness waiver offers student borrowers a unique opportunity to get student loan forgiveness faster. The Biden administration is allowing previous previously ineligible student loan payments to “count” toward the 120 monthly student loan payments required for student loan forgiveness. For example, this includes partial or late student loan repayments or any student loan payments made before student loan consolidation. The limited student loan forgiveness waiver expires on October 31, 2022. That said, Biden has proposed making the limited student loan forgiveness waiver permanent.
What’s the latest in student loan forgiveness?
Biden plans to enact large-scale student loan forgiveness. In recent weeks, Biden has canceled $6 billion in student loans for 200,000 student borrowers. The president also announced major changes to student loan forgiveness. That said, Biden hasn’t publicly commented on the large-scale student loan cancellation recently, though he plans to announce a decision in a few weeks. Student borrowers are hoping to avoid a student loan nightmare scenario, even as progressive members of Congress continue to pressure Biden to forgive $50,000 in student loans.
Student loans: next steps
Student loan repayment will resume for federal student loans beginning September 1, 2022. This is especially important for student loan forgiveness, as each payment you make can bring you closer to getting out of student loan debt. As you plan to restart student loan repayments, here are some helpful ways to save money on your student loans: