Your Top Student Loan Questions Answered: What if my loan is transferred to a new servicer?

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As we kick off summer, I’d like to highlight an important update affecting borrowers with loans serviced by the Missouri Higher Education Loan Authority (MOHELA), particularly those seeking loan forgiveness through the Public Service Loan Forgiveness (PSLF) and Teacher Education Assistance for College and Higher Education (TEACH) programs.

Recently, the Department of Education (ED) announced that MOHELA will be transferring their federal student loan accounts to other federal student loan servicers. Borrowers should receive communication about the transfer from MOHELA and their new servicer. According to the Student Loan Protection Center, more than 824,000 Californians are eligible for public service loan forgiveness.

What if my loan is transferred to a new servicer?

Upon receiving confirmation of a loan transfer, borrowers should:

  • Establish an online account with their new servicer and save the new servicer’s information.
  • Provide any changes in their contact information to their new servicer.
  • Make any changes necessary to direct federal student loan payments to their new servicer, such as banking information or auto-payment settings.
  • Ensure that StudentAid.gov has your updated contact information.

As with any transfer, I encourage borrowers to print or download all PSLF-related forms and account history while they have access to their MOHELA accounts. Once transferred, I also encourage borrowers to review their information, including PSLF counts and balances, to ensure a smooth transition. As a reminder, the California Student Borrower Bill of Rights, protects borrowers from any negative consequences stemming from a sale, assignment, transfer, system conversion, or payment made by the borrower to the original student loan servicer. If you have any issues as a result of these transfers or changes, you are encouraged to submit a complaint to us.

ED Taking on Management of PSLF and TEACH Programs

The ED also announced that PSLF and TEACH borrowers will no longer be assigned to a single loan servicer. All customer service and processing of the PSLF and TEACH programs will be done via StudentAid.gov. To allow for the transition, beginning May 1, 2024, there will be a pause on all related processes, including new applications, updated employment certifications, and loan forgiveness. Borrowers will be able to submit the forms, but they won’t be processed until July. Borrowers can use the PSLF Help Tool to submit any forms.

Borrowers who are scheduled to reach the 120-payment forgiveness threshold during these months should continue making payments. Once their forgiveness is processed, they will be issued a refund of any payments made beyond the 120 qualifying payments. The payments may also be applied to other outstanding federal student loans.

Upcoming Loan Servicing Changes

Coming later in 2024, the following changes will be made to protect borrowers from scams and help them identify valid information coming from the ED’s trusted partner sites:

  • Federal loan servicer websites and email addresses will change from “.com” to “.gov.” MOHELA borrowers may not see these changes implemented until late June.
  • Federal loan servicer websites will include branding for the ED’s Office of Federal Student Aid.
  • Borrowers will have a simplified log-in process, allowing them to use their StudentAid.gov account username and password (FSA ID) to log in to both their loan servicer’s website and StudentAid.gov.

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Last updated: May 30, 2024 @ 9:56 am