Student-loan borrowers in public service are facing a key change starting in May — and it'll mean delays in their debt cancellation progress

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Student-loan borrowers in public service are facing a key change starting in May — and it'll mean delays in their debt cancellation progress
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  • Processing of Public Service Loan Forgiveness forms will be paused beginning in May.
  • It's a result of the Education Department transitioning the program from MOHELA to Federal Student Aid.
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Some key changes are on the way for thousands of federal student-loan borrowers in public service.

President Joe Biden's Education Department recently posted new guidance on Federal Student Aid's 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 processed by servicer MOHELA — but that'll soon change.

According to the department, PSLF — along with the Teacher Education Assistance for College And Higher Education Grant program — will shift from being managed by MOHELA to being managed directly through Federal Student Aid.

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

"Beginning on May 1, 2024, you will no longer be able to access your PSLF progress, certified employment, or payment counts on MOHELA's borrower portal," the department said in its guidance. "If you want to save screenshots and correspondence for your personal records, we recommend accessing the portal by April 30, 2024."

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While borrowers can still submit PSLF forms during this time, they won't be processed until July, and they will not see any updates to their payment count during this pause. Once processing resumes, payment counts will be updated. Additionally, payments will still be due during this transition, but any payments that a borrower makes that exceed the needed 120 qualifying payments toward 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 counts," per 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 Education Department will fully manage the program. As a result, borrowers can view their PSLF payments directly on studentaid.gov, access "enhanced" services like status tracking for their applications, and see quicker processing times for PSLF.

On top of this transition, MOHELA is in the process of transitioning borrowers to a new servicing platform, which could mean up to 30-day delays in posting payments.

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

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

MOHELA later sent a cease-and-desist letter to the group, with a spokesperson saying a statement that "any claims that MOHELA does not act in the best interest of the borrowers we serve as a federal contractor is simply not true."

"Intentionally spreading false information and narratives about MOHELA's work on behalf of Federal Student Aid does nothing to improve the experience for students and borrowers navigating the federal student loan program and the repayment of their federally owned loans," the spokesperson said.

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