Latest news with #MOHELA
The Hill
01-08-2025
- Business
- The Hill
Student loan borrowers lament system changes as interest accrual restarts for SAVE
Carrie, a single mother currently between jobs, had a student loan payment of $0 a month under the Saving on Valuable Education (SAVE) repayment plan. After a court ruling against SAVE and pro-student debt forgiveness President Biden was replaced with President Trump, she acted fast to switch to an income-driven repayment (IDR) plan to secure the lowest payment possible on her more than $200,000 in student loans. But despite approval for the new plan, Carrie's student loan servicer, MOHELA, said she must reapply for an IDR plan or risk monthly payments of almost $2,500. Around the country, student loan borrowers are struggling with what to do as repayment options are set to dwindle and interest accrual for the millions on SAVE restarts Friday. 'I was initially under the assumption that I was calculated from the income that I provided to them a few weeks ago when I applied for another income based repayment plan. I was very wrong,' Carrie told The Hill, adding the MOHELA staffer could not tell her what her payments were based on and that she was not currently under any IDR plan. Carrie, who like others interviewed for this story requested anonymity to speak freely, said the employee told her, 'Well, what you're going to have to do then, in order to prevent your payments from going to the full $2,400 when your SAVE plan ends, what you're going to have to do is go back as soon as possible and actually start a new application from scratch and reapply for a new income driven repayment plan.' Reached for comment, MOHELA directed questions from The Hill to the Department of Education. Last year, the 8 th Circuit Court of Appeals struck down the SAVE plan, a Biden-era creation that saw more than 4 million borrowers sign up before it was put into forbearance due to the ruling. While the forbearance is still in place, the Trump administration restarted interest accrual for those on the plan, encouraging borrowers to change to another option. 'Since day one of the Trump Administration, we've focused on strengthening the student loan portfolio and simplifying repayment to better serve borrowers. As part of this effort, the Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan — such as the Income-Based Repayment Plan. Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress,' Education Secretary Linda McMahon had said. However, others intend to ride out the benefit of no payments for as long as possible. Sean, an entertainment lawyer in Los Angeles with a wife and one child, has seen his law school student debt grow $60,000 over the past 10 years despite making the payments required of him. He has decided to stay on the SAVE plan and will just make the interest accrual payments until everyone is kicked off it. 'I was paying about $1,300 a month. I have a family: I have a young son, 3 years old. We would like to have a second child. Admittedly, it has been very difficult for me to conceive the thought of having a second child,' Sean said. 'I'm going to start making payments, I think on the interest, because refinancing or going on under one of the other programs right now is going to cost me like $2,500 to $3,000 a month. You know, hardly affordable by any stretch of the imagination,' he added. Even as the SAVE plan ends, other options will also dwindle after Republicans passed the 'big, beautiful bill,' which will leave borrowers with a new Repayment Assistance Plan or a standard plan. The new Repayment Assistance Plan would require 30 years of payments before student debt relief is allowed, up from 20 years to 25 years in previous plans. The standard plan would give a borrower a loan with a 10-to-25-year life span, depending on the amount. 'Under the SAVE plan, my monthly payments would have been capped at 10 percent of my income; now, the modified IBR [Income-Based Repayment] plan will cap my payments at 15 percent since I have loans that were disbursed before 2014. The new, higher monthly payments will significantly impact my life,' said Jessica, a borrower from New York with over $100,000 in student loans. 'I have started a family, and I currently rent. My student loan balance has always been a financial setback when it comes to purchasing my first home, and child care costs are also exorbitant. This financial strain will mean less discretionary spending and more focus on my essential family needs,' she added. Borrowers and advocates decry the confusion they say has occurred since Trump took office in regards to the student loan system, although the Education Department noted the released timeline that includes the availability of the new Repayment Assistance Plan next year while other changes will come in the following years. But for now, advocates are struggling to see the light at the end of the tunnel. 'It's ridiculously complicated. It's unsustainably complicated. The entire chaos, chaotic system was hard enough to discern before Trump got in office. And, you know, between all the miscommunications, conflicting communications coming from the Department of Education to, supposedly, moving the loans to the Small Business Administration, I frankly, don't think that the people in Washington, D.C. have the first clue' what's going on, said Alan Collinge, founder of Student Loan Justice.
Politico
18-07-2025
- Business
- Politico
460K student loan borrowers to be denied repayment plan
'Loan servicers cannot process these applications as SAVE is no longer an option, as it is illegal,' a department spokesperson wrote in a statement to POLITICO. The agency is introducing two new payment plans and phasing out the matrix of current options as part of President Donald Trump's sweeping reconciliation legislation. His administration has railed against SAVE for being a burden to taxpayers and called for simplifying the loan repayment process as part of a broader strategy to reshape how students borrow and pay back loans. Borrowers who were signed up for SAVE are in a forbearance while the courts decide the program's future. The department has previously stated it plans to move SAVE borrowers to different plans in the fall and has encouraged them to explore other repayment options. Some student loan experts argue that borrowers may have not known they were applying for SAVE when selecting the lowest monthly payment option. It's a 'bit of struggle to understand' if they intended to apply for the Biden-era program that's on hold, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a servicer trade group that represents MOHELA and Aidvantage, among others. He said its best to have borrowers just reapply entirely for a student loan repayment plan. Student debt relief advocates are concerned people could have higher monthly payments and end up paying more in the long run since borrowers couldn't make qualifying payments toward forgiveness while in the SAVE forbearance. 'If their income has shifted in the last year, it's going to result in a higher payment,' said Persis Yu, the deputy executive director and managing counsel at Student Borrower Protection Center. 'Since this time hasn't counted toward cancellation, it means that people are ultimately going to be paying more on their loans during the life of it.'
CNN
10-07-2025
- Business
- CNN
Student loan servicer pauses payment counts tracking in a move experts say could cause confusion
Students logging into their student loan servicer accounts may not be able to see their progress in loan forgiveness payments after the Department of Education stalled payment counts. One of the largest student loan servicers began notifying borrowers that it is temporarily removing the ability to track loan forgiveness payment counts for income-driven repayment plans in a move that some experts say could cause confusion for borrowers. 'Federal Student Aid has temporarily removed the forgiveness payment counts for income driven repayment. Unfortunately, our representatives do not have any additional information related to your IDR forgiveness counts. Please continue to visit for updates,' an automated voice message said through the MOHELA (Missouri Higher Education Loan Authority) customer service phone line. MOHELA manages more than 7 million federal student loan accounts, according to its 2024 financial disclosure and is one of several student loan servicers that the Department of Education contracts with to collect student loan payments from borrowers. The temporary pause that could affect some of those millions of borrowers comes as litigation continues over former President Joe Biden's student loan repayment plan, which promised lower monthly payments and a faster path to loan forgiveness. It also comes as the Trump administration has sought to eliminate the Department of Education and roll back the previous administration's student loan forgiveness policies. The Biden administration had introduced a series of more affordable payment plans including the the Saving on a Valuable Education (SAVE) plan in 2023, which allowed borrowers to cap their monthly student loan bills at 5% of their income, instead of the previous 10%. Republican state attorneys general sued, arguing the plans were too generous and footed by non-college-educated taxpayers. The Education Department announced on Wednesday it will restart interest accrual for borrowers in the SAVE plan in compliance with an injunction blocking implementation of the plan. The department said in a news release that it was directing federal student loan services to resume charging interest on August 1, noting that interest would not be assessed retroactively. Betsy Mayotte, president of the Institute of Student Loan Advisors, said the MOHELA notice is causing 'a lot of confusion and anxiety' for borrowers. 'To say it's unfortunate is an understatement, but it's the result of the litigation, the fact that certain Republican states thought that the prior administration had exceeded their authority by creating this SAVE plan, and the court seems, at least, so far, to agree,' Mayotte said. Alyssa Dobson, director of financial aid and scholarships at Slippery Rock University in Pennsylvania, said one of the consequences of the pause is that students are unable to find payment information, calling it a state of 'mass chaos and confusion.' 'Right now, I know that my borrowers, who are now my alum now because they're in repayment, can't reliably find information on how many payments they've made towards public service forgiveness,' she said. 'The only place that they've been able to find this information is at and that's concerning to them because their loan servicer is their point of contact.' Students work with loan servicers to make payments to eventually have their loans forgiven, she said, adding that it's 'quite concerning' to not be able to get that information from them. A Department of Education spokesperson told CNN that borrowers who log into their accounts will see a banner that reads: 'A federal court issued an injunction preventing the implementation of the Saving on a Valuable Education (SAVE) Plan and parts of other income-driven repayment (IDR) plans. As a result, your IDR payment count and payment history are temporarily unavailable. Stay up-to-date on court actions affecting IDR plans: 'Borrowers can still see their PSLF payment count when they're logged into their accounts. The PSLF payment counters were not impacted by the February injunction,' the spokesperson added. PSLF refers to the Public Service Loan Forgiveness program, which cancels any remaining student debt after qualifying public-sector workers make 120 monthly payments. A US Court of Appeals ruling in February blocked the agency from implementing Biden's SAVE plan and parts of other income-driven repayment plans. The Education Department removed applications for all income-driven repayment plans from its website, effectively locking out borrowers from adjusting their plans if they're unable to pay the standard rate in a move to comply with the judge's order. Mayotte said the recent move to pause the payment counts tracking may be related to the SAVE litigation, which she said blocked the entire regulatory package that SAVE was under. 'When the latest injunction blocked the whole package, that meant that the Department of Ed could no longer count those periods of deferment and forbearance going forward from February,' she said. 'And so, because of that change, they had to take the counter down so they could either wait out the litigation or reprogram it to not reflect those particular deferments and forbearances from February forward.' Dobson said the move is 'very stressful' for borrowers, and 'the need for guidance and the incoming concerns are really growing.' 'These students made decisions, life decisions, important decisions based on something that they believed would be there and would be traversable, would be usable. And you know, now they're feeling like maybe it won't be. And it's really impactful to their mental health,' she said.
CNN
10-07-2025
- Business
- CNN
Student loan servicer pauses payment counts tracking in a move experts say could cause confusion
Students logging into their student loan servicer accounts may not be able to see their progress in loan forgiveness payments after the Department of Education stalled payment counts. One of the largest student loan servicers began notifying borrowers that it is temporarily removing the ability to track loan forgiveness payment counts for income-driven repayment plans in a move that some experts say could cause confusion for borrowers. 'Federal Student Aid has temporarily removed the forgiveness payment counts for income driven repayment. Unfortunately, our representatives do not have any additional information related to your IDR forgiveness counts. Please continue to visit for updates,' an automated voice message said through the MOHELA (Missouri Higher Education Loan Authority) customer service phone line. MOHELA manages more than 7 million federal student loan accounts, according to its 2024 financial disclosure and is one of several student loan servicers that the Department of Education contracts with to collect student loan payments from borrowers. The temporary pause that could affect some of those millions of borrowers comes as litigation continues over former President Joe Biden's student loan repayment plan, which promised lower monthly payments and a faster path to loan forgiveness. It also comes as the Trump administration has sought to eliminate the Department of Education and roll back the previous administration's student loan forgiveness policies. The Biden administration had introduced a series of more affordable payment plans including the the Saving on a Valuable Education (SAVE) plan in 2023, which allowed borrowers to cap their monthly student loan bills at 5% of their income, instead of the previous 10%. Republican state attorneys general sued, arguing the plans were too generous and footed by non-college-educated taxpayers. The Education Department announced on Wednesday it will restart interest accrual for borrowers in the SAVE plan in compliance with an injunction blocking implementation of the plan. The department said in a news release that it was directing federal student loan services to resume charging interest on August 1, noting that interest would not be assessed retroactively. Betsy Mayotte, president of the Institute of Student Loan Advisors, said the MOHELA notice is causing 'a lot of confusion and anxiety' for borrowers. 'To say it's unfortunate is an understatement, but it's the result of the litigation, the fact that certain Republican states thought that the prior administration had exceeded their authority by creating this SAVE plan, and the court seems, at least, so far, to agree,' Mayotte said. Alyssa Dobson, director of financial aid and scholarships at Slippery Rock University in Pennsylvania, said one of the consequences of the pause is that students are unable to find payment information, calling it a state of 'mass chaos and confusion.' 'Right now, I know that my borrowers, who are now my alum now because they're in repayment, can't reliably find information on how many payments they've made towards public service forgiveness,' she said. 'The only place that they've been able to find this information is at and that's concerning to them because their loan servicer is their point of contact.' Students work with loan servicers to make payments to eventually have their loans forgiven, she said, adding that it's 'quite concerning' to not be able to get that information from them. A Department of Education spokesperson told CNN that borrowers who log into their accounts will see a banner that reads: 'A federal court issued an injunction preventing the implementation of the Saving on a Valuable Education (SAVE) Plan and parts of other income-driven repayment (IDR) plans. As a result, your IDR payment count and payment history are temporarily unavailable. Stay up-to-date on court actions affecting IDR plans: 'Borrowers can still see their PSLF payment count when they're logged into their accounts. The PSLF payment counters were not impacted by the February injunction,' the spokesperson added. PSLF refers to the Public Service Loan Forgiveness program, which cancels any remaining student debt after qualifying public-sector workers make 120 monthly payments. A US Court of Appeals ruling in February blocked the agency from implementing Biden's SAVE plan and parts of other income-driven repayment plans. The Education Department removed applications for all income-driven repayment plans from its website, effectively locking out borrowers from adjusting their plans if they're unable to pay the standard rate in a move to comply with the judge's order. Mayotte said the recent move to pause the payment counts tracking may be related to the SAVE litigation, which she said blocked the entire regulatory package that SAVE was under. 'When the latest injunction blocked the whole package, that meant that the Department of Ed could no longer count those periods of deferment and forbearance going forward from February,' she said. 'And so, because of that change, they had to take the counter down so they could either wait out the litigation or reprogram it to not reflect those particular deferments and forbearances from February forward.' Dobson said the move is 'very stressful' for borrowers, and 'the need for guidance and the incoming concerns are really growing.' 'These students made decisions, life decisions, important decisions based on something that they believed would be there and would be traversable, would be usable. And you know, now they're feeling like maybe it won't be. And it's really impactful to their mental health,' she said.
CNN
10-07-2025
- Business
- CNN
Student loan servicer pauses payment counts tracking in a move experts say could cause confusion
Students logging into their student loan servicer accounts may not be able to see their progress in loan forgiveness payments after the Department of Education stalled payment counts. One of the largest student loan servicers began notifying borrowers that it is temporarily removing the ability to track loan forgiveness payment counts for income-driven repayment plans in a move that some experts say could cause confusion for borrowers. 'Federal Student Aid has temporarily removed the forgiveness payment counts for income driven repayment. Unfortunately, our representatives do not have any additional information related to your IDR forgiveness counts. Please continue to visit for updates,' an automated voice message said through the MOHELA (Missouri Higher Education Loan Authority) customer service phone line. MOHELA manages more than 7 million federal student loan accounts, according to its 2024 financial disclosure and is one of several student loan servicers that the Department of Education contracts with to collect student loan payments from borrowers. The temporary pause that could affect some of those millions of borrowers comes as litigation continues over former President Joe Biden's student loan repayment plan, which promised lower monthly payments and a faster path to loan forgiveness. It also comes as the Trump administration has sought to eliminate the Department of Education and roll back the previous administration's student loan forgiveness policies. The Biden administration had introduced a series of more affordable payment plans including the the Saving on a Valuable Education (SAVE) plan in 2023, which allowed borrowers to cap their monthly student loan bills at 5% of their income, instead of the previous 10%. Republican state attorneys general sued, arguing the plans were too generous and footed by non-college-educated taxpayers. The Education Department announced on Wednesday it will restart interest accrual for borrowers in the SAVE plan in compliance with an injunction blocking implementation of the plan. The department said in a news release that it was directing federal student loan services to resume charging interest on August 1, noting that interest would not be assessed retroactively. Betsy Mayotte, president of the Institute of Student Loan Advisors, said the MOHELA notice is causing 'a lot of confusion and anxiety' for borrowers. 'To say it's unfortunate is an understatement, but it's the result of the litigation, the fact that certain Republican states thought that the prior administration had exceeded their authority by creating this SAVE plan, and the court seems, at least, so far, to agree,' Mayotte said. Alyssa Dobson, director of financial aid and scholarships at Slippery Rock University in Pennsylvania, said one of the consequences of the pause is that students are unable to find payment information, calling it a state of 'mass chaos and confusion.' 'Right now, I know that my borrowers, who are now my alum now because they're in repayment, can't reliably find information on how many payments they've made towards public service forgiveness,' she said. 'The only place that they've been able to find this information is at and that's concerning to them because their loan servicer is their point of contact.' Students work with loan servicers to make payments to eventually have their loans forgiven, she said, adding that it's 'quite concerning' to not be able to get that information from them. A Department of Education spokesperson told CNN that borrowers who log into their accounts will see a banner that reads: 'A federal court issued an injunction preventing the implementation of the Saving on a Valuable Education (SAVE) Plan and parts of other income-driven repayment (IDR) plans. As a result, your IDR payment count and payment history are temporarily unavailable. Stay up-to-date on court actions affecting IDR plans: 'Borrowers can still see their PSLF payment count when they're logged into their accounts. The PSLF payment counters were not impacted by the February injunction,' the spokesperson added. PSLF refers to the Public Service Loan Forgiveness program, which cancels any remaining student debt after qualifying public-sector workers make 120 monthly payments. A US Court of Appeals ruling in February blocked the agency from implementing Biden's SAVE plan and parts of other income-driven repayment plans. The Education Department removed applications for all income-driven repayment plans from its website, effectively locking out borrowers from adjusting their plans if they're unable to pay the standard rate in a move to comply with the judge's order. Mayotte said the recent move to pause the payment counts tracking may be related to the SAVE litigation, which she said blocked the entire regulatory package that SAVE was under. 'When the latest injunction blocked the whole package, that meant that the Department of Ed could no longer count those periods of deferment and forbearance going forward from February,' she said. 'And so, because of that change, they had to take the counter down so they could either wait out the litigation or reprogram it to not reflect those particular deferments and forbearances from February forward.' Dobson said the move is 'very stressful' for borrowers, and 'the need for guidance and the incoming concerns are really growing.' 'These students made decisions, life decisions, important decisions based on something that they believed would be there and would be traversable, would be usable. And you know, now they're feeling like maybe it won't be. And it's really impactful to their mental health,' she said.
