Student loan borrowers pursuing federal public service forgiveness are getting a new servicer. What to know

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Most federal student loan borrowers who’ve been pursuing public service loan forgiveness have faced some confusion and frustration along the way.

The program, which allows those who work for the government or specific nonprofits to get their debt canceled after 10 years, has been plagued by problems. Borrowers have complained of botched timelines, misinformation and wonky requirements they weren’t made fully aware of.

As a result, they may now be a little uneasy about news that the government will soon be matching them with a different loan servicer.

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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 as smooth as possible.

Your new servicer is MOHELA

Until recently, borrowers pursuing public service loan forgiveness have had their accounts handled by the Pennsylvania Higher Education Assistance Agency, also known as FedLoan. But FedLoan, which handled the loans of 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.

“While the name of your servicer is changing, 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 servicers.

The servicer transition is happening ‘in waves’

The transition is already occurring, Buchanan said.

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

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

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Watch for letters, email with next steps

Borrowers should be sure to read all letters and emails from their servicer, Buchanan said. “We don’t send communications for no reason, and it’s important to know if there is any action you need to take.”

Expect to have to set a new password to login into your new account and to update your banking details, and perhaps your debit card information, if you’re enrolled in automatic payments. (Keep in mind that most federal student loan payments remain on pause until at least September, and that the months that pass during the pause count toward your timeline to forgiveness even while you’re not paying.)

Since so many borrowers pursuing public service loan forgiveness complain that their number of qualifying payments have been undercounted, you’ll want to check your payment count before the transfer to MOHELA if you still have time, said higher education expert Mark Kantrowitz.

“Download a list of all of your qualifying payments,” he said, and then compare it to the payment count after the transfer.

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

Sophie Tremblay

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