Navient to MOHELA: What This Loan Transfer Really Means for You

• Navient is transferring its student loan portfolio to MOHELA in the fall of 2024.

• The transition affects both federal and private student loans.

• Loan terms, interest rates, and borrower benefits will remain unchanged.

• MOHELA has faced criticism for servicing issues, which borrowers should be aware of.

If you’re one of the 2.7 million borrowers with Navient-serviced loans, you’ve likely received notice that your loan will soon be transferred to MOHELA (Missouri Higher Education Loan Authority).

This move, announced in January 2024, is part of Navient’s broader exit from the private and federal student loan servicing business and will affect both private student loans and Federal Family Education Loan Program (FFELP) loans.

As a borrower, you’re probably wondering what this means for you. Will your loan terms change? How reliable is MOHELA as a servicer? And what about those rumors of potential loan cancellations?

We hear you. The student loan landscape is complex enough without the added stress of a servicer change. That’s why we’ve put together this comprehensive guide to help you navigate the Navient to MOHELA transition.

In this article, we’ll break down:

• What’s actually changing (and what isn’t)

• MOHELA’s track record as a loan servicer

• How to manage your loans during the transition

• The potential for loan cancellations for some borrowers

• Steps you can take to protect your interests

We’ll also address concerns raised by advocacy groups like the Student Borrower Protection Center and lawmakers, including recent communications from Senator Elizabeth Warren to Navient’s leadership about potential loan cancellations.

My team and I understand the frustration you must feel not having a say in this transfer. While regulations and contracts allow these changes without your consent, your concerns matter — especially when you’re being moved to a servicer that’s been accused of all sorts of bad acts. Although you can’t opt out, you can take steps to protect your interests during this transition. This guide will show you how.

Related: Why Are My MOHELA Student Loans in Forbearance?

What it is: The transfer of Navient-serviced student loans to MOHELA.

How it works:

• The transfer process begins in the fall of 2024

• Navient will send updates over the next few months

• About two months before the change, borrowers will receive detailed information

• When loans transfer, Navient will notify borrowers

• MOHELA will send a welcome letter with loan details after the transfer is complete

Who’s affected: All Navient borrowers with federal and private student loans in good standing. Borrowers in default may see their accounts remain with Navient.

What to do:

• No immediate action is required from borrowers

• Watch for communications from both Navient and MOHELA

• Prepare to log in to a new website (MOHELA’s) using existing user ID and password

Deadline: No specific deadline for borrower action. The transfer will occur automatically.

The transition from Navient to MOHELA will bring some changes for borrowers, although many aspects of your loans will remain the same. Here’s what you need to know

Firstly, your loan terms, interest rates, and account numbers will not change. This means your current repayment plan, including any income-driven repayment plans, will remain in effect. Similarly, any benefits associated with your loans, such as interest rate reductions for automatic payments, will continue under MOHELA’s servicing.

However, the most significant change will be in how you manage and interact with your loan account. You’ll need to use MOHELA’s website and customer service channels once the transfer is complete. While Navient has stated that your current user ID and password will work on MOHELA’s site, you should be prepared for a new online interface and potentially different features or tools for managing your loans.

For borrowers with multiple loans, verify that all your loans have been transferred correctly. Some borrowers may find that only certain loans are moved to MOHELA, while others remain with Navient or are transferred to a different servicer. It’s your responsibility to keep track of all your loans and ensure they’re being properly managed post-transfer.

Potential Loan Cancellation

An important development highlighted in Senator Warren’s letter to Navient is the potential for loan cancellation for some borrowers. This potential cancellation particularly applies to:

1. Borrowers with loans from for-profit colleges: If you attended a for-profit institution, especially between 2000 and 2007, your loans might be eligible for cancellation due to potentially predatory lending practices.

2. Loans subject to the FTC’s “Holder Rule”: This rule, dating back to 1975, allows borrowers to raise the same claims and defenses against a loan provider that they could raise against the original seller of the good or service. In this case, if your school engaged in misconduct, you might have grounds for loan cancellation.

3. Loans affected by Navient’s lending practices: Senator Warren’s letter suggests that Navient should cancel loans that were part of subprime lending programs with for-profit colleges.

Note: These cancellations are being discussed, but they have not yet been implemented. Stay informed about developments in this area and be prepared to advocate for your rights if you believe you qualify for cancellation.

Here’s what you need to know about key aspects of loan management during this transition:

Online Account Access and Login Credentials

What to expect: Your current user ID and password will work on MOHELA’s website after the transfer.

What to do:

• Keep your login information secure

• Be prepared to use a new website to access your account

• After the transfer, log in to verify your account details

Autopay and Billing Processes

Navient has stated that existing autopay arrangements should transfer automatically. But stay vigilant:

• Continue making payments to Navient until notified otherwise

• Watch for instructions from MOHELA on updating payment information

• After transfer, verify that your autopay settings are correct on MOHELA’s system

Making Extra Payments or Prepayments

If you regularly make extra payments or prepayments on your loans, follow these guidelines:

• Continue your current payment practices until the transfer is complete

• After the transfer, contact MOHELA to confirm how to allocate extra payments

• Verify that any prepayments made before the transfer are correctly applied to your balance

Handling Pending Applications or Requests

For borrowers with ongoing applications or requests:

What to expect: Applications in process with Navient should transfer to MOHELA.

What to do: Follow up with MOHELA after the transfer to ensure the completion of any pending requests.

Throughout the transition period, keep your contact information up to date and monitor your email and mail for updates from both Navient and MOHELA. While there’s no specific deadline for action, stay vigilant throughout the fall 2024 transition period to ensure a smooth transfer of your loans.

Despite the change in servicer, many aspects of your student loans will remain unchanged. This continuity is crucial for borrowers to understand as they navigate the transition from Navient to MOHELA.

Interest Rates: Your interest rates will remain the same after the transfer. MOHELA does not have the authority to change the interest rates on your existing loans. This applies to both fixed and variable rate loans. If you have a variable rate loan, any future rate changes will continue to be based on the terms of your original loan agreement, not on the servicer change.

Loan Terms: The fundamental terms of your loans will not change. This includes:

• The principal balance of your loans

• Your repayment term (the length of time you have to repay the loan)

• Any special repayment arrangements, such as graduated or extended repayment plans

Payment History and Loan Details: Your complete payment history will transfer from Navient to MOHELA. This includes:

• Records of all past payments

• Any periods of deferment or forbearance

• Progress towards loan forgiveness programs, if applicable

Verify that this information has transferred correctly once you gain access to your MOHELA account. While errors are rare, it’s always wise to double-check.

Deferment, Forbearance, and Repayment Plans: If you are currently in a deferment or forbearance period, or on a specific repayment plan (such as an income-driven repayment plan), these arrangements will continue under MOHELA. You will not need to reapply for these programs due to the servicer change. However, you should still adhere to any regular recertification requirements for income-driven plans.

Borrower Benefits: Any borrower benefits associated with your loans, such as interest rate reductions for automatic payments or on-time payment incentives, will continue under MOHELA’s servicing. These benefits are part of your loan terms and are not tied to a specific servicer.

MOHELA has been servicing student loans for over 40 years. In recent years, it has grown to become one of the largest servicers of federal student loans. However, this growth has been accompanied by increased scrutiny and criticism.

Common Complaints and Issues:

1. Public Service Loan Forgiveness Problems: MOHELA has faced significant criticism for its handling of the PSLF program. Borrowers have reported issues with tracking qualifying payments, processing applications, and providing accurate information about the program.

2. Customer Service Challenges: Many borrowers have reported long wait times when calling MOHELA, difficulty getting clear answers to their questions, and inconsistent information from different representatives.

3. Website and Account Access Issues: Some users have experienced difficulties accessing their online accounts or finding necessary information on MOHELA’s website.

4. Processing Delays: There have been reports of delays in processing payments, updating account information, and applying for or recertifying income-driven repayment plans.

5. Capacity Concerns: Senator Elizabeth Warren has also raised concerns about MOHELA’s ability to handle the influx of new loans from Navient, given their existing issues with servicing failures and backlogs. After the return to repayment in 2023, at least 2.5 million borrowers were affected by various servicing failures, including unprocessed forms and payment miscalculations.

Recent Performance Metrics

While specific, up-to-date performance metrics may not be publicly available, in 2023, the U.S. Department of Education announced that MOHELA would be surrendering over 1.5 million federal student loan borrower accounts from its portfolio. This action was taken following increased scrutiny of MOHELA’s servicing practices.

Steps Borrowers Can Take

1. Document Everything: Keep detailed records of all communications with MOHELA, including dates, times, and names of representatives you speak with.

2. Use Written Communication: When possible, communicate with MOHELA in writing (email or certified mail) to maintain a paper trail.

3. Regularly Check Your Account: Monitor your account frequently to ensure payments are processed correctly and your loan details are accurate.

4. Stay Informed: Keep up-to-date with changes to student loan policies or servicing practices that might affect you.

5. Know Your Rights: Familiarize yourself with your rights as a borrower and the obligations of your loan servicer.

6. Seek Help When Needed: If you encounter issues with MOHELA, don’t hesitate to file complaints with the appropriate authorities, such as the Consumer Financial Protection Bureau or the Department of Education’s Federal Student Aid Feedback System.

When will my loans transfer to MOHELA?

The transfer process begins in the fall of 2024. Navient will notify you about two months before your specific loan transfer. When the transfer is complete, you’ll receive a welcome letter from MOHELA. Keep an eye on your email and mail for these important communications.

What will change when my loans are transferred to MOHELA?

Your loan servicer will change from Navient to MOHELA, meaning you’ll use a new website to access your account and contact MOHELA for loan-related questions. However, your loan terms, interest rates, and repayment plans will remain the same. Stay alert for instructions on accessing your new online account.

Will my repayment plan options and borrower benefits continue?

Yes, your current repayment plan and existing borrower benefits, like interest rate reductions for autopay, will continue after the transfer to MOHELA. These aspects are part of your loan terms and aren’t tied to a specific servicer. Verify these details in your MOHELA account after the transfer.

Are all my Navient loans transferring to MOHELA?

Most Navient-serviced loans will transfer to MOHELA. However, checking with Navient is crucial if you’re unsure about specific loans. After the transfer, carefully verify that all your loans are accounted for in your new MOHELA account to ensure nothing is overlooked.

If I am in a deferment, forbearance, or repayment plan, do I need to reapply?

No, your current status in deferment, forbearance, or a specific repayment plan should transfer automatically to MOHELA. However, it’s wise to verify your status with MOHELA after the transfer. Remember to continue recertifying for income-driven plans as usual to maintain your eligibility.

Can MOHELA change my interest rate?

No, MOHELA cannot change your existing interest rates. Your loan terms, including interest rates, remain the same after the transfer. Any future changes to variable rates will continue to follow the terms of your original loan agreement, not because of the servicer change.

Will my autopay settings transfer to MOHELA?

Autopay arrangements should transfer automatically to MOHELA. However, it’s crucial to verify your autopay settings once you can access your MOHELA account. You may need to update your banking information. Double-check that payments are being processed correctly after the transfer.

How will I know when my loans have been transferred to MOHELA?

Navient will notify you when the transfer occurs, and MOHELA will send a welcome letter with your loan details. You’ll be able to log in to your MOHELA account once the transfer is complete. Keep an eye on your email and mail for these important notifications.

What should I do if I have issues during or after the transfer?

If you encounter issues during or after the transfer, contact MOHELA’s customer service for assistance. Document all communications and issues thoroughly. If problems persist, consider filing a complaint with the Consumer Financial Protection Bureau or the Department of Education’s Federal Student Aid Feedback System.

Am I eligible for loan cancellation?

Some borrowers may be eligible for loan cancellation, particularly those with loans from for-profit colleges or loans subject to the FTC’s “Holder Rule.” This applies especially to loans originated between 2000 and 2007. Eligibility may depend on factors such the type of school you attended, whether your school engaged in misconduct, and if your loan was part of Navient’s subprime lending programs with for-profit colleges.

The transition from Navient to MOHELA marks a significant change for millions of student loan borrowers. Many aspects of your loans will remain the same. But stay informed and proactive throughout this process.

Keep a close eye on communications from both servicers, verify your loan details after the transfer, and be prepared to navigate MOHELA’s servicing system. Given MOHELA’s mixed track record, vigilance is key.

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