What you need to know:
- Missouri Higher Education Loan Authority (MOHELA) was one of five companies awarded a contract by the Department of Education to service federal student loans in 2021 and beyond.
- MOHELA, a nonprofit provider, was one of only two pre-existing federal loan servicers (along with Edfinancial Services) to be given a new contract.
- MOHELA ranked seventh on Student Loan Planner’s list of best federal student loan servicers and last among nonprofit providers.
Missouri Higher Education Loan Authority (MOHELA) was one of five loan servicers chosen by the Department of Education to handle the servicing of federal student loans starting in mid-December 2020.
Of the five companies chosen, only MOHELA and EdFinancial Services are currently engaged in servicing federal student loans, which could make the transition easier for borrowers who are moved to MOHELA compared to borrowers who are assigned to an inexperienced servicer.
Nevertheless, MOHELA’s customer service reputation has been, at best, mediocre. Here’s what you need to know about MOHELA if it’s your new student loan servicer.
What is Missouri Higher Education Loan Authority (MOHELA)?
MOHELA student loan servicing is a public agency of the state of Missouri. It’s headquartered in Chesterfield, Mo., with two additional branches located in Columbia, Mo., and Washington, DC.
Student loans have been MOHELA’s primary focus from the start. It was established in 1981 for the express purpose of helping college students get access to student loans. Today, it has nearly 40 years of experience acquiring, financing and servicing student loans.
In 2011, MOHELA student loan servicing became the first nonprofit institution to service loans that were part of the Federal Direct Loan Program (FDLP). In addition to servicing over $67 billion of FDLP and third-party private student loans, it’s a holder of $1.2 billion in Federal Family Education Loan Program loans and $64.1 million in private student loans.
MOHELA customer feedback
MOHELA’s customer feedback has been mixed. As a smaller nonprofit provider, it has historically received higher ratings than massive for-profit servicers. But it hasn’t always compared favorably to servicers of similar size.
In Student Loan Planner’s 2019 ranking of the nine student loan servicers (based on CFPB complaint data), MOHELA came in at No. 7. It ranked last among nonprofit servicers and even below two of the “Big Four” service providers — Nelnet and Great Lakes, which is now a Nelnet affiliate company.
Looking at more recent data, MOHELA received 54 CFPB complaints between Aug. 2019 and Aug. 2020, with the majority of those complaints related to servicing problems. The rest of the complaints against MOHELA were related to credit reporting and debt collection issues.
By comparison, Great Lakes only received 114 complaints during that same period when servicing nearly 4 million more accounts than MOHELA.
MOHELA actually received more complaints per million customers than Great Lakes. Given its relatively good record, Nelnet, which owns Great Lakes, was disappointed by the Department of Education’s decision to cancel its contracts and intends to put up a legal fight.
Currently, MOHELA has an A + rating with the Better Business Bureau and a 1-star (out of 5) customer review rating based on 16 reviews.
MOHELA could be better than your current servicer … but only with proper staffing
If you’re being moved to MOHELA from one of the worst student loan servicers, the change could benefit you. Student Loan Planner founder Travis Hornsby said, “I ultimately think they’ll be better than Navient and FedLoan Servicing … but that’s only if they’re properly staffed.”
Currently, MOHELA services 2.5 million accounts with a little more than 500 employees. But Nelnet and Great Lakes service 11.4 million borrowers with a combined 8,500 employees.
Even if MOHELA was given just 25% of these accounts from Nelnet, it would need to significantly increase its staffing resources. If it isn’t able to hire enough workers and properly train them before the transition occurs, problems and headaches could abound.
Hornsby also said, “MOHELA uses the COMPASS software designed by the company that runs FedLoan (PHEAA). So, my guess is that if FedLoan gets fired at some point, MOHELA could have involvement with [the Public Service Loan Forgiveness program].”
It appears that FedLoan Servicing will continue as the exclusive provider for the PSLF program for at least the next two years. But if MOHELA is asked to assume management of the program down the road, this would again require an increase in its workforce capacity and training.
What to do if MOHELA is your new servicer
Providing that the proposed servicer changes go through, your loans should be transferred sometime near the end of 2020 or early in 2021. If MOHELA is your new servicer, you should receive an email or letter from the company letting you know.
Your loan details and your repayment plan won’t change. New servicers are supposed to work together with your former providers to ensure that you received proper credit for all prior payments. However, you may want to download your payment history before your account is officially transitioned so you can watch out for processing mistakes or discrepanices.
Once your account is moved over, you’ll need to start sending your payments to MOHELA. Follow their instructions on how to set up your online account and change your servicer information with your bank or credit union if you use an online bill-pay service.
How to contact MOHELA about your student loans
You can reach MOHELA customer service in one of the following ways:
Toll Free: 1-888-866-4352
Business hours are Monday through Thursday, 7 am.- 9 p.m. (CT), and Friday, 7 a.m. – 5 p.m. (CT).
633 Spirit Drive
Chesterfield, MO 63005-1243
Address for sending payments:
As of July 1, 2020, the payment address for MOHELA student loans has changed and is no longer publicly published. You’ll need to log in to your online account or call the company’s customer service number to get your payment address.
MOHELA doesn’t currently provide an email address on its website for student loan borrowers.
MOHELA student loan borrowers can submit documents by fax using one of the following numbers.
Toll Free: 1-866-222-7060
Online chat support:
Borrowers can access chat support by visiting MOHELA’s contact page and selecting their state of residence and question topic.
Does MOHELA forgive federal student loans?
In most cases, no. Federal loans that are part of the Direct Loan program (FDLP) can only be forgiven by the Department of Education. MOHELA can, however, provide FFEL student loan forgiveness for Missouri students attending Missouri schools.
How long is the MOHELA grace period?
All federal student loan borrowers have six months after finishing or leaving school before they’ll need to begin sending payments to MOHELA. Private student loan borrowers may need to send payments sooner or even immediately following loan disbursement.
Does MOHELA report to credit bureaus?
Yes, all federal student loan servicers, including MOHELA, report their borrowers’ credit history to the major credit bureaus. MOHELA could report any late payment to the bureaus, but reporting is required for delinquencies of at least 90 days.
Does MOHELA have an app?
Yes, the MOHELA app is available on both the Apple App Store and the Google Play Store. Borrowers can use the app to view their account details and send payments.
Unhappy with MOHELA? Know your options
If you’re having problems with your MOHELA student loans that aren’t being resolved by the company’s customer service team, you have a few courses of action you can take:
- File a complaint. You can file a complaint with the CFPB or complain directly to the Department of Education.
- Federal Direct Loan Consolidation. The Department of Education doesn’t allow borrowers to pick their student loan servicer. The only exception is during a Direct Loan Consolidation. If you’re looking to leave MOHELA and keep your eligibility for federal benefits, this is your best option.
- Refinancing with a private lender. Refinancing is one way to escape from MOHELA if you’re OK with losing federal benefits and have a strong credit score and income. This option can save you thousands of dollars with a lower interest rate and get you better service along the way. See if student loan refinancing is right for you.
If you’re unsure how to handle your MOHELA student loans, Student Loan Planner can help. Our consultants know the ins and outs of the student loan industry and have helped over 4,000 clients build a comprehensive plan for paying off their student debt.
Plus, all of our advisors offer up to six months of email support after your call. Check out how the consultation process works and book a time that’s convenient for you.