Major update for millions expecting debt relief under the student loan forgiveness scheme – are you affected?

Student loan forgiveness for public sector workers, including teachers, nurses and firefighters, is temporarily suspended as the Department of Education renews the program.

The Public Service Loan Forgiveness (PSLF) program will no longer be provided solely by the Mohela company, but will instead be administered internally by Federal Student Aid.

The PSLF program, created in 2007, writes off the remaining balance of borrowers who work in the public sector or government after ten years of eligible repayment.

Relocation providers are expected to remain active through July, impacting approximately 2 million borrowers participating in the program.

This means some borrowers may experience delays in clearing their debts and will have to wait until after the pause.

It comes as servicer Mohela (the Missouri Higher Education Loan Authority) also quietly announced that it will no longer manage more than one million individual borrower accounts, which will be moved to other federal servicers.

Mohela is one of the nation’s largest student loan servicers and became the sole servicer of PSLF in July 2022, but has been widely criticized for its management of the program.

The transition is part of a larger overhaul of the federal student loan system to streamline debt processing and improve service for borrowers.

The change will also apply to the Teacher Education Assistance for College and Higher Education (TEACH) Grant program, which will also be administered directly through Federal Student Aid.

“From May 1 through July, borrowers will not be able to view their PSLF payments on MOHELA’s website, and any forms submitted for PSLF will not be reviewed,” the Department of Education wrote in a rack.

Borrowers are still expected to make monthly payments during the pause.

They can still submit PSLF forms to apply for forgiveness or certify employment, which will be reviewed once the transition is complete.

Once they reach their 120th qualifying payment, which means they can apply for forgiveness, they will have to wait for their debt to be forgiven.

“Borrowers who qualify for forgiveness during the pause may request a forbearance from their servicer and any additional payments will be refunded to the borrower or applied to their other outstanding federal student debt,” the department said.

Once the transition is complete, the loans will still be administered by a student loan servicer, but Federal Student Aid will administer the program.

They will be able to track the progress of refunds through Federal Student Aid website.

Borrowers can also contact the Department of Education Contact Center directly if they have questions about the status of their debts, to improve customer service and speed up processing times.

As of 2022, Mohela has served as the sole administrator of the Public Service Loan Forgiveness (PSLF) program, which has been a major focus of the Biden administration’s recent forgiveness initiatives.

The PSLF program has long been criticized for poor communication between the Department of Education, loan servicers and borrowers – and errors in tracking payment numbers.

Employees often found that all or part of their payments did not count because they were enrolled in a plan that was not covered by the initiative.

The Biden administration has expanded the program’s eligibility, forgiving about $62.8 billion in debt for 876,000 borrowers so far.

In total, the government has approved nearly $160 billion in debt forgiveness, after announcing another $6 billion in debt cancellations on Wednesday.

Mohela has also faced a lot of criticism for the way she handles the program.

In March, Senator Elizabeth Warren of Massachusetts called on CEO Scott Giles to testify before Congress amid reports of “widespread service outages” impacting “at least 40 percent of borrowers.”

In March, the Massachusetts senator invited Scott Giles, the CEO of services provider Mohela, to testify before the Senate Banking Committee.

Deborah Soto thought she had paid off all the student loans for her daughter Elena (center) before the end of the interest rate pause last September, but was shocked to discover that a new loan totaling $16,947 had suddenly appeared in her account

DailyMail.com asked its readers to get in touch if they had become frustrated with the service they received from the servicer – and received dozens of responses from graduates concerned about their loans.

Some were stunned by the monthly repayment amount they had received, others had seen their loan forgiveness postponed, while others had outstanding debts that they thought they would not have to pay off.

And many of them complained about virtually non-existent customer service, leaving them waiting on the phone for hours without an answer.

Mohela was also the first federal servicer to be penalized for service failures following the return of loan repayments to borrowers in October last year.

The Department of Education withheld more than $7 million in wages from the company in October 2023 after it failed to send timely billing statements to 2.5 million borrowers.

The error left more than 800,000 borrowers delinquent on their loans.