MOHELA Federal Student Loan Servicer: Features, Discounts, and Our Recommendations

MOHELA is one of five main federal student loan servicers and manages the repayment of roughly 20% of all federal student loans. As a federal loan servicer, MOHELA has several core features, including various repayment options, billing help, and loan forgiveness programs.

MOHELA is also the most negatively reviewed federal student loan servicer. If you’ve been assigned to MOHELA, you might be wondering what the repayment process will look like, what features you can take advantage of, and—if you’re having a bad experience—how the heck you can switch to a better service. (Spoiler alert: You probably can’t.)

Table of Contents

1. What are MOHELA student loans?
2. How do MOHELA loans work?
3. Recent MOHELA complaints, scandals, and reviews
4. Can I change student loan servicers?
5. FAQ

What are MOHELA student loans?

The Higher Education Loan Authority of the State of Missouri (MOHELA) is a federal student loan servicer, meaning the Department of Education (ED) has contracted MOHELA to handle the billing and other services of your federal student loans. 

MOHELA is not the lender itself (that’s Uncle Sam); instead, MOHELA is simply the “middleman” who processes your payment and provides customer service (as questionable as that customer service may be).

Students don’t get a say in who their student loan servicer is; it’s assigned to you when you take out a loan from the federal government. And MOHELA has become notoriously one of the worst federal loan services. 

In our roundup of the best student loan servicers, we ranked the Higher Education Loan Authority of the State of Missouri 4th out of 5—primarily because, while it handles 20% of all federal student loans, it’s responsible for 41% of all student loan servicer complaints.

Types of student loans serviced by MOHELA

MOHELA services a wide range of federal student loans, including:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS loans
• Direct Consolidation Loans

MOHELA also services some private student loan programs.

Read More:

What’s the Difference Between Subsidized and Unsubsidized Loans?

Features of MOHELA student loans

If you’re new to MOHELA, familiarize yourself with the features available to you:

• Autopay discount: MOHELA offers a 0.25% interest rate reduction if you select auto debit for loan repayment.
• Military benefits: Members of the U.S. military can access several repayment benefits through MOHELA.
• Teacher loan forgiveness: MOHELA offers resources for teachers who may qualify for loan forgiveness up to $17,500.
• Deferment and forbearance: Because MOHELA services federal loans, you have access to deferment and forbearance resources, which allow you to postpone payments during times of hardship. Learn more about forbearance and deferment for student loans.
• Consolidation loans: If you’re tired of paying various federal loans at different interest rates, you can consolidate through MOHELA for one interest rate and one monthly payment. Learn more about student loan consolidation.
• Public student loan forgiveness (PSLF): For a while, MOHELA serviced all loans that were enrolled in the PSLF program. However, the ED transitioned the oversight of that program to itself in May 2024. Learn more about Public Service Loan Forgiveness.

How do MOHELA student loans work?

If MOHELA services your student loan, you can log into your account online to manage repayment. The website offers borrowers a few functions:

• Make payments: This is the biggest functionality of MOHELA’s website. You’ll create an account and make monthly payments until your loan is paid off, refinanced, consolidated, or forgiven. You can set up automatic payments online and add or remove bank accounts online as well; plus, the website lets you calculate a payoff amount.
• Manage your account: Log in to the website to update your contact info, change notification preferences, view tax info, and see your loan details.
• Change repayment plans: If the Standard Repayment plan doesn’t work for you, you can explore other repayment options via MOHELA and apply for your preferred repayment plan.
• Explore loan options: Your account lets you find options regarding loan deferment, forbearance, and forgiveness.
• Contact for help: You can also find information to contact customer service for assistance with your loan. Fair warning: MOHELA’s customer service is notoriously slow; borrowers have reported waiting on hold for hours in the last few years.

Types of repayment options

MOHELA offers five repayment options for federal student loans:

1. Standard Repayment: This is the default plan, which involves fixed monthly payments for 10 years (up to 30 if consolidated).
2. Graduated Repayment: This plan is for borrowers who expect their income to increase over time. You still pay off the loan in 10 years (30 if consolidated), but payments start small and increase every two years.
3. Extended Repayment: Borrowers who have more than $30,000 in Direct Loans can extend repayment to 25 years (with fixed or graduated payments).
4. Income-Based Repayment (IBR): Borrowers make a monthly payment set at either 15% or 10% (new borrowers as of July 1, 2014) of their discretionary income. After 25 or 20 (new borrowers as of July 1, 2014) years, the remaining balance is forgiven. You must be able to meet needs-based requirements for this plan.
5. Income-Sensitive Repayment: This is a temporary solution that allows you to lower payments for 12 months at a time. This repayment plan lasts five years before returning to Standard or Graduated Repayment. You must meet the income requirements for this plan.

Repayment plan	Repayment term	Payments
Standard	10 years (30 if consolidated)	Fixed monthly payments
Graduated	10 years (30 if consolidated)	Monthly payments start low, then increase every two years
Extended	Up to 25 years	Fixed or graduated payments
Income-based repayment	Up to 25 or 20 years	15% or 10% of discretionary income
Income-sensitive repayment	5 years, then switch to Standard or Graduated	Lower monthly payments for 12 months at a time

How to make a payment to MOHELA

You have several options to make your monthly payment to MOHELA:

• One-time payment online
• Automatic (recurring) payment online
• Automated phone system
• Your financial institution’s online bill pay service
• Check or money order

The best option is automatic payment, which earns you a 0.25% interest rate reduction. Just make sure you keep enough money in your checking account so you don’t overdraft (and pay overdraft fees) or have a returned payment; MOHELA may charge a fee for insufficient funds and late payments.

Recent MOHELA complaints, scandals, and reviews

MOHELA has been criticized in recent years for several potential unlawful practices that harm borrowers. In 2023, the Department of Education withheld a $7.2 million payment to MOHELA because of “gross servicing failures,” including severe loan servicing errors, long customer service wait times, and untimely billing statements.

In July 2024, the American Federation of Teachers (AFT) alleged in a lawsuit against MOHELA that the student loan servicer was overcharging borrowers.

A few months later, more than 50 members of Congress urged the ED to review MOHELA’s contract with the department, due to these and other issues. Shortly after, in October 2024, the Student Borrower Protection Center contacted the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and the Federal Deposit Insurance Corporation (FDIC) about other unlawful practices that MOHELA was potentially engaging in.

The most egregious? Forcing borrowers to waive certain rights by hiding questionable language in its website terms of service. Among the rights borrowers had to agree to waive:

• Borrowers can’t share screenshots of information they receive from MOHELA.
• Borrowers can’t publicize information about their repayments via MOHELA.
• Borrowers can’t share account information, even with government regulators and consumer watchdog organizations.

It’s not just lawyers, politicians, and advocacy groups that are rallying against MOHELA. Student borrowers themselves have been highly critical of the servicer in online MOHELA reviews. MOHELA has a 1.2-star rating on Trustpilot based on consumer reviews; similarly, MOHELA is not accredited with the Better Business Bureau and has an F rating based on more than 3,600 complaints.

And according to the CFPB, MOHELA services roughly 20% of all federal loan accounts, but it accounts for 41% of overall student loan servicer complaints.

Can I change from MOHELA to a different student loan servicer?

You can’t switch from one student loan servicer to a different student loan company simply because you’re not happy with your current servicer’s performance. The Department of Education assigns you a servicer when you take out a student loan, and that’s the servicer you’re stuck with. That said, there are a few specific scenarios in which your servicer could change.

Here’s a quick look at how you can change your student loan servicer:

• Consolidating your federal student loans with a different servicer
• Refinancing your federal student loans with a private lender

In rare cases, the ED may choose to transfer you to a different servicer (but you don’t get a say in this); this can happen when the ED ends a contract with a specific servicer. And if you become “totally and permanently disabled,” you might qualify to have your federal loans discharged—in which case, you don’t switch servicers, but simply no longer need to repay.

FAQ

Is MOHELA a private or federal loan?

MOHELA is a federal loan servicer—meaning it manages federal student loans on behalf of the U.S. Department of Education. It does not originate private loans, but it may have serviced private loans in the past through partnerships.

What is going on with MOHELA student loans?

MOHELA has been in the spotlight due to issues with loan servicing during the federal student loan repayment restart.

Since repayments resumed in late 2023, borrowers have reported delays, incorrect billing, and poor customer service. The Department of Education even withheld performance-based payments from MOHELA in late 2023 because of these failures. If you’re affected, you may be eligible for an administrative forbearance or other support.

Why did my student loan payment increase with MOHELA?

Your MOHELA student loan payment may have increased due to changes in your repayment plan, the end of pandemic-related relief, or a recalculation under an income-driven repayment (IDR) plan.

For example, your loan may have exited a grace or deferment period, or your payment amount may have changed if your income or family size was updated under the SAVE or REPAYE plan. If you’re unsure why your payment went up, contact MOHELA or recertify your income to ensure your repayment details are accurate.

Will all MOHELA loans be forgiven?

Not all MOHELA loans will be forgiven, but some may qualify under federal forgiveness programs. MOHELA services borrowers on PSLF and IDR plans, both of which can lead to forgiveness. 

Eligibility depends on your loan type, repayment plan, and employment. The recent IDR account adjustment may bring borrowers closer to forgiveness, but it’s not automatic for everyone.

What kind of company is MOHELA?

MOHELA is a nonprofit student loan servicer contracted by the federal government.
It’s one of several companies the U.S. Department of Education uses to manage billing, payment processing, and communication for federal student loans. Though nonprofit, it operates similarly to other large servicers and has faced criticism for customer service issues.

Why are MOHELA loans in forbearance?

Some MOHELA loans are in forbearance because of administrative processing delays or borrower-requested pauses. The Department of Education has also placed some loans in forbearance as a temporary fix for servicing errors during the repayment restart. While forbearance can pause your payments, it may allow interest to accrue, so it’s essential to review your loan status and understand how it affects your total balance.