MOHELA Student Loans Review

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Federal borrowers may be familiar with MOHELA, one of the loan servicers used by the Department of Education.mohela

MOHELA handles more new federal student loans than any other servicer. If you’ve received student loans through the government, there’s a good chance that MOHELA is your servicer.

Despite the strange name, MOHELA is a name that comes up a lot with college students. As one of the nine federal loan servicers, MOHELA collects borrowers’ payments and provides customer support to their borrowers.

They can answer questions about your loans and explain payment options and other programs that may be available. Let’s take a closer look at what MOHELA is and how you may end up with them as your loan servicer.

What is MOHELA?

mohelaMOHELA stands for Missouri Higher Education Loan Authority and is a student loan servicer headquartered in St. Louis, Missouri.

They also have offices in Columbia, Missouri, and Washington, D.C. MOHELA is one of nine loan servicers utilized by the Department of Education to service federal student loans.

Formed in 1981, MOHELA  was created as a way to help students obtain low-cost student loans. They’ve been servicing federal loans for almost four decades.

In 2010, MOHELA created the Missouri Scholarship & Loan Foundation. The goal of the non-profit organization is to help make higher education more accessible and affordable for Missouri families. The Missouri Scholarship & Loan Foundation provides scholarships and low-cost loans to Missouri citizens.

What Kind of Loan is MOHELA?

MOHELA services federal student loans under the direct loan and Federal Family Education Loan (FFEL) programs. Federal student loan servicers are assigned by the Department of Education to borrowers when their loan payment is disbursed. Borrowers do not have a say in which loan servicer they are assigned.

The Department of Education allocates new federal loans to the loan servicers based on customer satisfaction scores. As of December 2018, Mohela was allocated 20% of all federal student loans, more than any other loan servicer.

Mohela also services private student loans.

Student Loan Repayment Through MOHELA

As a federal loan servicer, MOHELA gives borrowers access to all federal loan repayment options. There are three repayment methods available based on the length of repayment:

Standard Repayment Plan

Your MOHELA student loans will be placed on this repayment plan by default. Standard plans can last up to ten years and have a fixed monthly payment ($50 minimum). Monthly loan payments are based on your total loan amount.

Graduated Repayment Plan

Graduated plans start with lower monthly payments and increase every two years over the life of the loan, which is typically ten years.

Extended Repayment Plan

Similar to Graduated plans, Extended plans have 25-year terms. MOHELA Borrowers will end up paying the most with this option because of interest.

Income-Driven Repayment Plan

Besides the length of time, you can also choose a federal repayment plan based on your income. These plans are referred to as Income-Driven Repayment (IDR) Plans. Each IDR plan has its own requirements, terms, and conditions.

There are four IDR plans to choose from:

  1. Pay As You Earn (PAYE)
  2. Revised Pay As You Earn (REPAYE)
  3. Income-Based Repayment (IBR)
  4. Income-Contingent Repayment (ICR)

IDR plans have set monthly payments based on the borrower’s income. Monthly payments may increase as your income increases. It’s also possible to reduce your monthly payments to $0 under IDR plans.

Does MOHELA Forgive Student Loans?

MOHELA borrowers have access to federal student loan forgiveness programs as well as loan discharge. Each program has its own guidelines and requirements. What student loan forgiveness options are available?

Public Service Loan Forgiveness (PSLF)

The most popular forgiveness option, PSLF, allows loan forgiveness tax-free if you meet the qualifications.

Requirements include working full-time in specific public service jobs and making 120 on-time qualifying payments on your Direct Loans. Your loans also need to be moved to one of the four Income-Driven Repayment (IDR) plans.

Income-Driven Repayment Forgiveness

Those who don’t qualify for PSLF can still get loan forgiveness bu signing up for one of the four IDR plans.  If you make loan payments for 20 to 25 years (depending on the specific plan), your remaining student loan debt will be forgiven.

Unlike PSLF, this isn’t tax-free. The IRS considers forgiven funds under this program to be taxable income. You may end up with a large tax payment when your debt balance is forgiven. You do have plenty of time to save for these extra taxes, though. Unfortunately, this could come with a hefty tax penalty.

Teacher Loan Forgiveness

Teachers in a low-income school or educational service organization may be eligible for Teacher Loan Forgiveness. You must be classified as a “highly qualified” teacher and work five consecutive academic years in a qualifying school or education setting.

Closed School Discharge

If your school closes while you’re enrolled or soon after withdrawing, you may be eligible for the discharge of your federal student loans.

Disability Discharge

In the event you become totally and permanently disabled, you may be eligible to have your student loans discharged.

Death Discharge

If the borrower, or the student on whose behalf the loan was obtained, dies, their student loans may qualify to be discharged.

MOHELA Payment Methods

MOHELA offers multiple methods for handling monthly student loan payments. It’s important to make payments on time if you want to qualify for most federal loan forgiveness programs.

What payment methods are available for MOHELA borrowers?

  • AutoPay: Automatic debit payments made from your bank account
  • Online: Online one-time payments on MOHELA’s website
  • Phone: Phone payments using MOHELA’s automated phone system (888.866.4352)
  • Online via Your Bank: Online bill pay through your bank or other bill service provider
  • Snail Mail: Pay through the mail with a check or money order

MOHELA makes it simple to make and track payments through online account access.

How Do I Apply for a MOHELA Student Loan?

As with any federal student loan, the student loan process starts by filling out the Free Application for Federal Student Aid (FAFSA). This will tell how much federal assistance you qualify for through the Department of Education.

FAFSA information is shared with schools you’ve applied to or listed on your FAFSA form. Those schools will calculate how much aid you can get from them. When you get accepted to a college, they will send you an award letter that explains how much aid you’re eligible to receive from the school.

Everything concerning your student loan will go through your school’s financial aid office until your loan payment is disbursed.

If you are a new borrower, you’ll need to complete entrance counseling and sign a Master Promissory Note(MPN). Your MPN is your agreement to pay back your student loan.

MOHELA isn’t part of the student loan application process. They only get involved once your loan payment is disbursed, and they are assigned as your loan servicer. You’ll be contacted by MOHELA to set up your account and payment options.

You’ll go through MOHELA’s customer service department to make any changes to your loan payments, switch to another repayment plan, or make other changes.

Can I Refinance My MOHELA Student Loans?

Yes, refinancing is an option for MOHELA student loans. Refinancing allows you to choose your lender and earn a lower interest rate. This can lead to thousands in dollars less in interest payments over the life of the loan. Refinancing student loans can also help people looking to repay their loan debt quicker.

To refinance your MOHELA student loans, you’ll need excellent credit to qualify with most private lenders. If you don’t have established credit or have no credit at all, many private lenders allow the use of a cosigner. This is someone who is financially responsible for your student loans if you can’t make payments.

Some lenders also allow a cosigner release, where your cosigner is free from financial responsibility after you reach certain repayment milestones.

Federal loans become private loans when they are refinanced, meaning you’ll no longer have access to federal protections and programs, like deferment and forbearance options. You’ll also lose access to federal repayment plans and loan forgiveness. Refinancing becomes your only repayment option once you decide to refinance.

How to contact MOHELA

If you need help for any reason, MOHELA offers multiple ways to get in touch.

  • Phone: 888-866-4352, from 7 AM to 9 PM CT, Monday through Thursday,  7 AM to 5 PM Fridays.
    • Note: Make sure you have your account number or social security number handy when you call. You’ll be asked for it before you can speak to a representative.
  • Fax: 866-222-7060
  • Chat: You can chat with a customer service representative when logged into your online account.
  • Mail: MOHELA. 633 Spirit Drive. Chesterfield, MO 63005-1243
    • Note: This address is for requests for assistance. Do not submit payments to this address.
  • Online: Through your online account, you can upload important documents. Borrowers can also follow MOHELA’s Twitter, Facebook, and LinkedIn accounts.

The Bottom Line

As one of the largest loan servicers used by the Department of Education, there’s a good chance you could be seeing their name if you’re a new borrower.

If you have a different loan servicer and want to switch to MOHELA, the only way to do that is by consolidating your loans to a Direct Consolidation Loan.

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