Borrowers apply for utility loan forgiveness to get new repairer

Carol Yepes | time | Getty Images

Most federal student loan borrowers who have applied for civil service loan forgiveness have faced some confusion and frustration along the way.

The program, which allows those who work for the government or specific nonprofit organizations to get their debt forgiven after 10 years, has been plagued with problems. Borrowers complained of sloppy deadlines, misinformation, and flawed requirements that they weren’t fully aware of.

As a result, they may now be a bit apprehensive that the government will soon put them in touch with another loan officer.

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Here’s what you need to know about the upcoming change and what the experts say you can do to make it as smooth as possible.

Your new repairer is MOHELA

Until recently, borrowers seeking public service loan forgiveness had their accounts managed by the Pennsylvania Higher Education Assistance Agency, also known as FedLoan. But FedLoan, which managed loans for 8.5 million student borrowers, announced last year that it would not renew its contract with the federal government.

Your new servicer will be MOHELA, or the Missouri Higher Education Loan Authority.

“Although your agent’s name will change, nearly every part of your post-transition experience will remain the same,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan officers.

The service transition happens “in waves”

The transition is already underway, Buchanan said.

“Some borrowers have already migrated to their new servicer and others are in the process in the coming months,” he said.

“We are conducting this transition in waves to minimize consumer issues.”

Jayk7 | time | Getty Images

Watch for letters, email with next steps

Borrowers should be sure to read all letters and emails from their servicing agent, Buchanan said. “We don’t send communications for no reason, and it’s important to know if there’s action to be taken.”

Expect to have to set a new password to log in to 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 repayments remain on pause until at least September, and the months that pass during the pause count toward your forgiveness schedule, even if you don’t pay. )

Since so many borrowers seeking public service loan forgiveness complain that their eligible payment count has been understated, you will want to check your payment count before transferring to MOHELA if you you still have time, said higher education expert Mark Kantrowitz.

“Upload a list of all your eligible payments,” he said, then compare it to the number of payments after the transfer.

“If they are different, identify the source of the discrepancy,” Kantrowitz added. You will want to communicate this to MOHELA as soon as possible.

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