- July 25, 2022
- Posted by: Shane Cummiskey
- Category: Litigation
Fed Loan Program is Ending Fed Loan Program is Ending It’s Contract With The U.S. Department Of Education. Fedloan Servicing will cease to be the student loan servicer for millions of federal borrowers in the coming months. Fedloan Servicing helped process Public Service Loan Forgiveness (PSLF) for student loans. However, PSLF servicing responsibility will now be transferred to MOHELA. MOHELA is a smaller student loan servicer that will be taking on a larger role for the Department of Education over the next few years. MOHELA is currently using AidVantage, (another student loan servicer that replaced Navient) to process consolidations and then returning those consolidated borrowers to MOHELA for servicing.
MOHELA, AidVantage, Nelnet, Great Lakes, and Edfinancial will be the major servicers in this transition from the old system to the new system when the Covid forbearance ends. However, there are currently significant backlogs within the PSLF approval process, particularly the Limited PSLF Waiver Process which is under a time constraint since it expires October 31, 2022. The transfer of millions of files from Fedloan Servicing to MOHELA, AidVantage, and Nelnet has exacerbated the severity of the backlog. If the Limited PLSF Waiver is not extended beyond the October deadline, many who qualify for forgiveness under this limited waiver may have to wait for several months into 2023 before receiving any documented confirmation from the Department of Education regarding their forgiveness, or credit for qualifying months under the waiver.
As a further complication, because Fed Loan Program is ending, borrowers who are eligible for Limited PSLF Waiver forgiveness may be required to resume payments after the Covid forbearance ends but before those borrowers have received any written confirmation from Fedloan or MOHELA regarding their forgiveness applications. This would require many borrowers to pay on loans that already qualify for forgiveness had their applications been processed in a reasonable timeframe. Without reasonable processing timeframes for routine servicing functions, borrowers with federal student loan debt can suffer significant delays in obtaining relief for their student loans.
Hope credit will help a client with answering information and keeping up to date on any changes to these new programs. You can come to our physical office at 6375 S Pecos Rd #224 Las Vegas, NV 89120, or call us at (760) 916-9313. Our business hours are Monday – Friday, 8:30 am to 5:00 pm. If you can’t reach us in the office or by phone, you can always email us at email@example.com.