The recent turmoil surrounding student loans has brought the Missouri Higher Education Loan Authority, or MOHELA, and the U.S. Department of Education to the forefront of discussions among borrowers. Handling both federal and private student loans, MOHELA has served as the intermediary for millions of borrowers, managing their billing, payment processes, and finding solutions to various repayment issues.
MOHELA, with nearly 40 years of experience, does not issue loans but instead acts as the servicer, meaning students make their payments and receive their billing statements through this organization. The authority services different types of federal loans, including Direct subsidized and unsubsidized loans, PLUS loans, and consolidation loans. MOHELA is also contracted to service some private student loans from lenders like SoFi and Laurel Road.
For students trying to determine if MOHELA is their servicer, they can find out by reviewing their billing statements, calling the Federal Student Aid Information Center, or logging onto their Federal Student Aid account online. If MOHELA is designated as their servicer, borrowers should expect to handle all communication and payment through them.
Despite MOHELA's significant role, the company has faced numerous criticisms, particularly concerning its customer service. Borrowers have reported frustrating experiences, with 98 percent of reviews on Trustpilot giving MOHELA one star. Issues include long wait times, poor customer service interactions, and problems with billing accuracy. While the organization was responsible for processing the largest amount of student loan forgiveness among contractors from 2022 to 2024, these customer service worries linger for many.
Meanwhile, the political environment surrounding student loan administration remains complex. Under President Donald Trump's administration, there have been calls to weaken or eliminate the Department of Education altogether. Although Trump has expressed disdain for the department, referring to it as "a big con job," the president lacks the power to close it via executive order. Instead, any downsizing would require Congress's support, which is complicated by the current political divide.
Experts like student loan analyst Mark Kantrowitz have indicated the possibility of the department undergoing severe cuts, impacting how federal financial aid is managed. Trump's administration has already begun adversarial actions, firing staff and terminating contracts, potentially affecting the resources available to students needing assistance.
Many Republicans have long sought to diminish the department’s influence, but the exact motivation behind this desire remains cloudy. It is important to clarify, as Kantrowitz pointed out, the president's approach might overlook the value the Department of Education possesses as a tool for executing educational policy across the nation.
The Department of Education, established by Congress in 1979, manages federal student aid, including student loans. The process by which it allocates these loans has come under fire, especially following the Biden administration's emphasis on providing student loan relief. Trump and his supporters appear to be capitalizing on confusion surrounding the department, mistakenly believed to control K-12 curriculum or educational standards.
Should the Department of Education face extinction, the responsibility of managing federal student loans would likely shift to another federal agency, such as the Treasury Department. This could lead to unprecedented chaos, according to Kantrowitz, who noted the Treasury does not have the infrastructure or experience relevant to higher education rules.
Nevertheless, current borrowers should remain assured the terms of their loans would remain unchanged. The interest rates and repayment plans specified when they took out their loans would stay intact, regardless of potential department changes. Borrowers will likely not feel immediate impacts from any transitional shifts, as most roles are managed through contractors.
Another significant aspect appears to be the fate of student loan forgiveness programs under Trump's leadership. The President has openly opposed broad student loan forgiveness, calling the Biden administration's relief efforts "a total catastrophe." Nevertheless, any forgiveness granted prior to any department shutdown is legally binding and cannot be undone. Kantrowitz reminds borrowers once loans have been forgiven, it is irreversible.
Recent events have demonstrated turmoil around forgiveness programs, especially after the Biden administration's Saving on Valuable Education (SAVE) plan was struck down by a ruling from the U.S. appeals court. This decision has added to the instability surrounding student financial assistance, leading some to question the viability of future forgiveness initiatives.
For those currently holding student loans, the most prudent action is to stay informed. Keeping updated with news from the Department of Education and knowing who your loan servicer is can provide clarity as the political gear shifts. Borrowers should also check their contact details with their servicers to prevent disruptions.
The looming changes prompt students to evaluate their repayment plans closely. Those enrolled under programs like PSLF might particularly want to track their progress, as options like the PSLF buyback program are set to provide advantages for making the most of their loan forgiveness opportunities before tighter regulations come down the line.
While prospects may appear uncertain and rife with potential disruptions, neither the impending political climate nor the challenges associated with specific servicers like MOHELA are insurmountable. Understanding where to find reliable information and resources can empower borrowers as they navigate these turbulent waters.