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Student-loan borrowers in public service will now have to wait until July for their debt relief forms to be processed

Ayelet Sheffey   

Student-loan borrowers in public service will now have to wait until July for their debt relief forms to be processed
  • Applications to the Public Service Loan Forgiveness program are paused through July.
  • It's a result of the program's transition away from servicer MOHELA to several federal servicers.

Some student-loan borrowers hoping for debt relief might have to wait a few months.

Beginning on May 1, the Education Department placed a pause on any processing of applications to the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after ten years of qualifying payments.

This pause is happening to allow PSLF accounts to be transferred away from student-loan company MOHELA, which was previously the sole servicer tasked with managing the program. During this transition, several different companies will assume management over PSLF accounts, but borrowers will be able to check their PSLF status directly through rather than through one of the servicers.

The transition is expected to be completed in July, after which borrowers will regain access to their account information. In the meantime, though, while borrowers can still submit PSLF applications, they will not be processed until the pause ends, and they will also be unable to access their PSLF history on MOHELA's portal.

Payments are also still due for borrowers during this period.

This transition is part of the Education Department's efforts to make the student-loan repayment system easier for borrowers to access. As Business Insider previously reported, many borrowers in PSLF have encountered challenges with MOHELA, including inaccurate payment counts toward PSLF, and strained servicer resources meant it was difficult for borrowers to get ahold of customer service.

The department has worked over the past few years to update borrowers' accounts and bring them closer to forgiveness — or discharge their loans if they met their qualifying payments — and the web streamlining is intended to improve the user experience on the front end.

Most recently, the department canceled $300 million in student debt for 4,600 PSLF borrowers, bringing the total debt relief through PSLF to $62.8 billion for 876,000 borrowers.

Still, it remains to be seen how effectively this transition will be completed. Additionally, BI first reported on Monday that MOHELA requested that over a million borrowers be transitioned from its portfolio to other servicers in the hopes that it could provide better service with a lighter load.

The Education Department agreed, and impacted borrowers have started receiving notices from MOHELA and their new servicer informing them of the change. In the meantime, the department has vowed to enforce oversight over servicers to ensure they are continuing to fulfill their contractual obligations to borrowers.

"The Department takes very seriously its responsibility to oversee servicers and ensure borrowers have a smooth and successful repayment experience," Federal Student Aid said in a recent blog post. "We will continue to monitor performance, communicate with servicers and borrowers, and take corrective action where needed."

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