Missouri Higher Education Loan Authority (MOHELA) is one of a handful of federal student loan servicers that manages the $1.63 trillion federal student loan debt portfolio. Additionally, MOHELA manages the Public Service Loan Forgiveness (PSLF) and TEACH Grant programs with the U.S. Department of Education.
It is possible that you have already interacted with MOHELA or will do so in the future if you have federal student loans. Therefore, it’s important to stay on top of your available repayment strategies — especially when it comes to loan forgiveness.
To clarify, MOHELA doesn’t have any exclusive student loan forgiveness programs. But MOHELA borrowers may be eligible for various different federal loan forgiveness programs.
Here’s what you need to know about your MOHELA loan forgiveness options.
A quick note about MOHELA and its role in student loans
MOHELA has worked with student loans for several decades as a private lender. Although it was a relatively small player as a federal loan servicer, the Department of Education announced in December 2021 that MOHELA would take over the PSLF and Teach Grant programs from FedLoan Servicing. As of December 2022, the transfer of FedLoan accounts to MOHELA was complete.
Additionally, MOHELA could take on a significant share of borrowers who are on income-driven repayment (IDR) plans, which would increase its responsibility for loans that could potentially be eligible for loan forgiveness in the future.
MOHELA only manages a portion of IDR plans. In fact, this portion is so small that the Department of Education bundles this loan servicer with other nonprofit servicers when reporting data.
For example, the Revised Pay As You Earn (REPAYE) program has more than $201 billion outstanding for more than 3.36 million borrowers as of the end of 2022. Nonprofit servicers as a whole (not just MOHELA) only service about $87.4 billion of outstanding loans on REPAYE. This equates to roughly 1.2 million borrowers.
So, it’ll be interesting to see how MOHELA continues to handle this major transition, including what share of repayment plans they’ll take on with such big changes in loan servicers.
MOHELA loan forgiveness programs for federal loans
If you have federal student loans serviced by MOHELA, it is worth exploring these forgiveness options in detail.
1. Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) allows borrowers to earn tax-free loan forgiveness in as little as 10 years. To be eligible for PSLF, you must:
- Work full-time for a qualifying employer in the public or nonprofit sector.
- Make 120 on-time payments under a qualifying repayment plan.
- Have eligible Direct Loans (or consolidate your loans with a Direct Consolidation Loan).
The federal student aid website now offers the PSLF Help Tool, which can assist you in submitting your Employment Certification Form (ECF) and seeking forgiveness.
2. Income-driven repayment forgiveness
IDR plans can lower your monthly student loan payments by capping your payment at 10% to 20% of your discretionary income. But they can also make you eligible for MOHELA loan forgiveness after 20 to 25 years of qualifying payments.
Popular federal student loan repayment options include:
- REPAYE
- Pay As You Earn (PAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
Additionally, President Biden’s Department of Education is proposing a New REPAYE plan that could make loan forgiveness and repayment dramatically more generous. The full details have yet to be released, but we’re following the developments closely.
Note that IDR plans require recertification of your income and family size each year in order to determine your monthly payment.
Also, keep in mind that IDR loan forgiveness will be taxed, so it’s important you begin saving for this eventual tax bomb.
3. Teacher Loan Forgiveness
Teachers might be eligible to receive up to $17,500 of MOHELA student loan forgiveness by using the Teacher Loan Forgiveness program.
However, teachers should be mindful of certain caveats and limitations associated with this program.
For instance, the full $17,500 of forgiveness is only available to “highly qualified” math and science teachers at the secondary level and special education teachers — other teachers max out loan forgiveness at $5,000.
Most teachers are better off pursuing PSLF for total loan forgiveness.
4. Alternative forgiveness options
Depending on your situation, you might be eligible to have your MOHELA student loans canceled through one of these alternative provisions:
- Total and Permanent Disability (TPD) discharge. You must have documentation showing you meet disability discharge requirements from one of three sources: the Department of Veterans Affairs (VA), the Social Security Administration or a physician.
- Closed school discharge. You might be eligible for discharge if your school closes while you’re enrolled or soon after you withdraw.
- Death discharge. The federal government will forgive a borrower’s student loans in case of death. The same applies if a parent who has Parent PLUS loans passes away.
StudentAid.gov details additional situations that could result in having your loans forgiven, canceled or discharged.
Other student loan forgiveness programs to explore
Even if you plan on pursuing MOHELA loan forgiveness through federal programs, you might meet eligibility requirements for another state- or profession-based loan forgiveness programs that might include federal and private student loans.
Many states have established student loan repayment programs designed to boost employment in certain regions or professions.
For example, some nursing loans can be forgiven in exchange for working in an underserved area. There are even programs to help wipe away law school debt.
Alternatively, if loan forgiveness isn’t an option, you might benefit from student loan refinance options to lower your interest rate or find better loan terms. For instance, Laurel Road and SoFi have fixed and variable rate options that come with large cash-back bonuses.
If you need help figuring out the best repayment plan — which might include loan forgiveness or exploring refinancing — our student debt experts can create a custom plan for you.
I have gray hairs worrying about my Mohella loan. SS# Original loan 24k. Graduated 1991. I’m 67. Handicapped and retired. ITT lied about cost, earning and job availability. Never used CAD drafting. Need forgiveness. Not another loan. Sick of daily calls from loan companies. Thank you. Carol Reeser
Hi Carol, so sorry for this! Sharing this blog the team has written regarding how to get loan forgiveness after defaulting on your student loans. You may also use our blog search engine to find topics you’re interested in.