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Student-Loan Borrowers in PSLF to Switch From MOHELA, Face Delays

Some key changes are underway for thousands of federal government borrowers.

President Joe Biden’s Department of Education recently released new guidance on the Federal Student Aid website with updates to the Public Service Loan Forgiveness program. The program, which forgives student debt for government and nonprofit workers after ten years of qualifying payments, is currently handled by Manager MOHELA – but that will change soon.

According to the department, PSLF – as well as the Teacher Training Assistance Grant Program for College and Higher Education – will move from management by MOHELA to direct management by federal student aid.

This means that starting May 1, the Department of Education will pause processing of all PSLF forms until the transition is complete in July.

“Beginning May 1, 2024, you will no longer be able to access your PSLF progress, certified employment, or payment statement on the MOHELA Borrower Portal,” the department said in its guidance. “If you would like to save screenshots and correspondence for your personal records, we recommend accessing the portal before April 30, 2024.”

Although borrowers can still submit PSLF forms during this time, they will not be processed until July and they will not see any updates to their payment numbers during this pause. Once processing resumes, the payment count will be updated. Additionally, payments will still be due during this transition, but any payments made by a borrower that exceed the 120 eligible payments required for forgiveness will be refunded once the transition is complete.

Loan servicers “will not be able to answer any questions related to your PSLF form or payment accounting,” according to the department, but borrowers will still be able to see if their forms were successfully submitted through the PSLF help tool.

Once PSLF processing resumes in July, borrowers’ loans will remain with their servicer, but the Department of Education will fully manage the program. As a result, borrowers can view their PSLF payments directly on studentaid.gov, access “enhanced” services like tracking the status of their applications, and see faster PSLF processing times.

In addition to this transition, MOHELA is migrating borrowers to a new servicing platform, which could result in up to 30 days of delays in posting payments.

The announcement of this transition comes after months of scrutiny from lawmakers and advocates over MOHELA’s handling of the PSLF. Most recently, Massachusetts Senator Elizabeth Warren invited MOHELA’s CEO to testify before Congress next week to address, in part, the company’s “impeding public workers’ access to PSLF relief.”

Warren, along with Senate Majority Leader Chuck Schumer and Sen. Bernie Sanders, also called for an investigation into MOHELA after advocacy group Student Borrower Protection Center released a report accusing the company of mismanaging PSLF .

MOHELA subsequently sent a cease and desist letter to the group, with a spokesperson stating that “any assertion that MOHELA is not acting in the best interest of the borrowers we serve as a federal contractor is simply false.”

“Intentionally spreading misinformation and narratives about MOHELA’s work in the name of federal student aid does nothing to improve the experience of students and borrowers navigating the federal student loan program and the repayment of their federal loans,” the spokesperson said.

businessinsider

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