Confusion Grows as MOHELA Halts Loan Forgiveness Payment Tracking

Washington, D.C. — Students logging into their loan servicer accounts may find they cannot see their progress toward student loan forgiveness. This change follows the Department of Education’s decision to temporarily halt payment counts for income-driven repayment plans.

MOHELA (Missouri Higher Education Loan Authority), one of the largest student loan servicers in the country, issued notifications to borrowers about this change. An automated message on the MOHELA customer service line explained, “Federal Student Aid has temporarily removed the forgiveness payment counts for income-driven repayment.”

MOHELA manages accounts for millions of borrowers and its decision to halt tracking payment counts has raised concerns among experts. The pause aligns with ongoing litigation regarding former President Joe Biden‘s repayment plan, which aimed to ease the financial burden on students by promising lower monthly payments and quicker paths to forgiveness.

In 2023, the Biden administration introduced the Saving on a Valuable Education (SAVE) plan, which allowed borrowers to limit their loan payments to 5% of their income, down from 10%. Critics, including some Republican state attorneys general, argue that this plan unfairly benefits college graduates at the expense of non-college-educated taxpayers.

On Wednesday, the Education Department announced it would resume interest accrual for borrowers under the SAVE plan, adhering to a court injunction that blocked implementation of the plan. Starting August 1, interest will be charged again, though it will not be applied retroactively.

Betsy Mayotte, president of the Institute of Student Loan Advisors, expressed that this situation has caused “a lot of confusion and anxiety” for borrowers. She stated, “It’s the result of the litigation, and the court seems to agree with certain Republican states that challenged these policies.”

Alyssa Dobson, director of financial aid and scholarships at Slippery Rock University, characterized the situation as “mass chaos and confusion.” She noted that her former students are struggling to verify their payment history toward public service forgiveness. “They can only find this information at StudentAid.gov, which is concerning since their loan servicer is their main point of contact,” she added.

A Department of Education spokesperson clarified that when borrowers log into their accounts, they will see a banner indicating the temporary unavailability of forgiveness counts. However, they can still access their Public Service Loan Forgiveness (PSLF) payment count, which remains unaffected by the injunction.

Since February, a U.S. Court of Appeals ruling has blocked the implementation of Biden’s SAVE plan and parts of other income-driven repayment plans. This has resulted in the Education Department halting all adjustments for borrowers unable to pay the standard rate, as it complies with the court’s order.

Mayotte noted that the decision to pause tracking may directly relate to the ongoing SAVE litigation. This pause means the Department of Education cannot count forbearance or deferment periods beyond February. As a result, they have halted the payment counter until further notice or reprogrammed it to reflect the ruling’s constraints.

Dobson expressed the stress faced by borrowers due to this uncertainty, stating, “These students made important life decisions based on what they understood about their loans. Now they are questioning if those plans are valid, impacting their mental health.”