April 20, 2018

MOHELA: What You Need to Know

Is MOHELA your federal loan servicer? Read on for what you need to know. Learn how to avoid common problems.

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What Is MOHELA: What You Need to Know

You finished school - now what? Do you have a large student loan bill with MOHELA?

MOHELA is the Missouri Higher Education Loan Authority. It's one of the largest student loan servicers. It's a non-profit with over 30 years in business. It services both federal and private student loans.

With so many borrowers, there are bound to be support issues. We've highlighted some of the common problems in this article. You can avoid them if you know the right steps to take.

Read on to learn how to navigate the world of MOHELA.

What Do Loan Servicers Do?

Student loan servicers help you manage your loans. They act as the middleman between you and the lender. It is their job to make sure your loans remain current. Loans in default will affect the servicer.

MOHELA has a contract with the federal government to service federal loans. Their services are free. Some of the things they help with include:

Unfortunately, student loan servicers are randomly assigned by the U.S. Department of Education. You have no control over who you'll get. If you prefer to leave your servicer, you may choose to consolidate or refinance your loans. Check out our articles on consolidation and loan refinance.

When Should You Contact MOHELA?

As soon as you are aware that MOHELA is your servicer, you should contact them. Set up an online account or call them. You can ask whatever questions you may have. You do not need to wait until your loans are in repayment to make contact.

You will have a grace period after graduation. During the first six months, you are not required to make payments. But making payments will help to reduce your balance. You will also reduce the interest accrued on your unsubsidized loans.

Remember: During school and deferments, interest on subsidized loans is paid for by the federal government. But the interest on your unsubsidized loans starts accruing as soon as the loan is taken out.

There are times when it is necessary to contact your servicer. You should call when:

  • You see bill issues
  • Your contact information changes
  • You can't afford your payments
  • You need to change your payment due dates
  • You received a bill while still in school
  • You have not received a bill

Note: If you don't contact MOHELA, your loan automatically goes into the Standard Repayment plan. This occurs whether you can afford it or not. If you can't afford the monthly payments, contact them to set up a different repayment plan.

The best way to contact MOHELA is via their website. You can also call them at 1-888-866-4352.

For questions about MOHELA or other servicers, call the Department of Education at 1-800-621-3115.

Common Problems

Every year, most loan servicers receive complaints. The complaints include bad information about loans, trouble with payments, and issues with fees charged. Your servicer is helping you through most likely your largest debt to-date. You want to be able to trust them and feel confident.

MOHELA's most common problems include:

  • Transfers to MOHELA: Did you have another servicer previously? If your loans were transferred to MOHELA (which again, unfortunately, is not your call), you may see a fee charged to the account. When loans get transferred from one servicer to another, information may get mixed up. Check your account.

    How to Fix This: Monitor your loans closely. Set up an online account. If you know your loan is being transferred, call the new servicer as soon as possible and ask any questions you may have.

  • Lack of Information: Another issue is regarding information about loans. Or the lack thereof. There is nothing worse than learning about errors that are the fault of your servicer. MOHELA has provided the wrong information to borrowers, or none at all. Which is the case for many borrowers whose loans were transferred to MOHELA.

    How to Fix This: If you believe you received the wrong information from your servicer, the best thing to do is to contact the Department of Education. Always maintain records of important loan information.

  • Payments Applied Incorrectly: This is one of the biggest issues for borrowers with all servicers. You can specify larger payments on certain loans. But sometimes, it's not set up correctly. Some borrowers were told that their payments were not being applied to the proper loans. Or in some cases, their payments increased with no explanation at all.

    Tip: Signing up for auto-debit is the best way to save money. When guaranteeing your payment to your servicer, they usually offer you a reduced interest rate, typically by .25%.

    How to Fix This: Monitor your payments. If your payments change, contact your servicer. There may be a simple explanation for it. If they can offer no explanation, contact the Department of Education. Maybe your payment increased because an income-driven repayment plan (IBR) ended. Or maybe you were on an IBR and your income increased, so your payment also increased.

    Public Service Loan Forgiveness: Did you think you were eligible for PSLF? Only to find out a payment plan error disqualified you? If you are planning on using PSLF, make sure you know the facts. If you change your repayment plan, you may become ineligible. Some borrowers thought they were enrolled in a PSLF plan, only to find out their payments weren't qualified.

    How to Fix It: Sign up for an income-driven repayment plan as soon as you can. After that, contact your servicer and ask them if there is anything else that is necessary. You will need your employer to fill out specific paperwork for the forgiveness. There may be issues when your loan gets transferred, but keeping track of all eligible payments will help. Contact your servicer for all issues. If you need to, contact the Department of Education.

Disputes: Who Do I Call?

First try to resolve the dispute with the loan servicer. You can always request to speak to a manager.

From there, if you are not satisfied, call the Department of Education at 1-800-621-3115. They should be able to look at your dispute and find the best response.

If you still cannot resolve the issue, you can contact the FSA Ombudsman Group. They are a confidential resource to resolve student aid disputes. You should use them as a last resort.

Remember it is important to keep an eye on your credit when student loans are involved. Your servicer may have reported you during a time when you were in a forbearance or deferment. Or during a loan transfer, they may have reported a missed payment. Knowing your credit will help you.

Bottom Line

The best thing is to remain in contact with your servicer. Keep informed by monitoring your loans from the date of first disbursement. You will be aware of any fees and questionable charges. Knowing your interest rate and paying it down while in school will help you over time. Learning which repayment options to choose can assist you in times of need.

Keep yourself educated. Read through our other articles about student loans. We can help you gain confidence when speaking with your loan servicer.

More from CreditDonkey:

How to Lower Student Loan Payments

Should I Consolidate Student Loans

Student Loan Forgiveness

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