How to Manage Federal Student Loans With MOHELA

If you’ve taken out federal student loans to finance your education (like I did) and you have MOHELA as your loan servicer, you need to take stock of where you stand with respect to your loans and learn about your repayment options. This is critical if you want to put your best “financial” foot forward and be in control of your student loans.

Here’s what you need to know to manage your MOHELA student loans.

1. What is MOHELA?

The U.S. Department of Education is your lender, but federal loans are serviced by nine loan servicing organizations assigned to help the government manage the billing and other services for your loan.

MOHELA — short for the Missouri Higher Education Loan Authority — was established in 1981, and is headquartered in St. Louis, Missouri. Although MOHELA has participated in the Federal Family Education Loan (FFEL) Program for more than three decades, it only began servicing federal student loans originated and guaranteed by the Department of Education in October 2011.

You could have more than one servicer if you have multiple loans. To confirm, check with the National Student Loan Data System.

2. What do you need to do to manage your MOHELA loans?

If you haven’t already set up an online account with MOHELA, you should create one immediately.

The online process is easy. Go to the “Create a New Account” page and fill in the required information, including your social security number, birthdate, username and password.

You can also create an account using MOHELA’s mobile Android or iOs app. But reviews of the app on both Google Play and App Store are mixed: 2.9 stars for Android and 2.1 stars for iOS in January 2020.

Once you’ve set up an account, or if you already have an online account, you can log in to access your account.

MOHELA’s online portal makes it easy for you to review and manage your account. You can:

Get your loan balances;
See the interest rates being charged;
Make your payments; and
Update your personal information.

You can also find other helpful tips and resources at its Info Center.

3. What if you have a question and need to contact MOHELA?

You can phone, email and/or mail/fax MOHELA.

Phone — Your social security number or MOHELA account number is required.

Toll-Free	888.866.4352
International	636.532.0600
TTY #	Dial 711 — support for hearing and speech-impaired callers

Email: Log in and send a secure email online.

Fax

Toll-Free	866.222.7060
International	636.787.2790

Mail

Payments

Request for assistance or special instructions

MOHELA

633 Spirit Drive

Chesterfield, MO 63005-1243

MOHELA’s Hours of Operation are:

Mon-Thurs: 7:00 AM to 9:00 PM (CT)
Fri: 7:00 AM to 5:00 PM (CT)

But, you can get payment and automated account information 24/7.

4. What if you have a problem with MOHELA?

MOHELA is not without its problems. In January 2020, the Better Business Bureau shows 40 complaints were filed in the past three years, of which 24 had to do with MOHELA’s billing and collection practices and 16 involved problems with products and services.

Additionally, there were 94 borrower complaints filed with the Consumer Financial Protection Bureau against MOHELA in 2019 alone.

So, what should you do if you have questions, concerns or issues with your MOHELA loans?

Contact MOHELA right away by phone, email and/or mail/fax (see contact list above).

If MOHELA cannot or does not resolve your problem, or you disagree with MOHELA, contact the Federal Student Aid Ombudsman Group. You can also file a complaint with Federal Student Aid and/or the Consumer Financial Protection Bureau.

At all times, it will help if you have identified the nature of your loan problem and have documented all the details, including notes of phone conversations, identity of MOHELA representatives etc.

5. What is the best way to deal effectively with MOHELA?

The Department of Education has provided several tips on this, including keeping careful notes of conversations, following up in writing after a conversation, keeping copies of correspondence and replies sent by mail, sending letters by certified mail, and more.

6. What are the payment methods?

You can make your MOHELA payments in many ways, including Auto Debit and by mail. Before you proceed, know that you can choose a payment date that works best for you.

If you choose Auto Debit, your loan payments will be automatically deducted from your checking or savings account on your due date each month, even if your due date falls on a weekend or holiday. But you will save 0.25% using this method. To avoid missing a payment, be sure to send a payment using other methods until MOHELA confirms you are set up for Auto Debit.
Logging in and paying online is the most flexible option since it allows you to make extra payments on individual loans. Make sure you schedule your payment for a business day, even if your payment falls on a weekend.
You can also pay by phone 24/7 by calling the numbers listed above. You will need your 10-digit account number or MOHELA account number to use the automated phone system.
If you prefer to send your payment by mail, make your check or money order payable to MOHELA. Be sure to include your account number on the check or money order. Your payment address may vary based on your specific account information, so log in or call for your payment address. Your payment should be mailed at least 5-7 business days before your due date to ensure receipt by due date.
For payment by your financial institution’s online bill pay service or other bill pay service provider, be sure that they have the correct mailing address (see payment by mail above). The downside of using this method is that you will still need to contact MOHELA directly if you have additional instructions.

When MOHELA receives a payment, it is typically applied first to outstanding interest and late fees, if any, and then to the principal balance.

7. Should you make extra payments?

If you have extra money, the answer is definitely YES. This will help you pay off your loans faster and save you money.

No matter which payment method you choose, you have the option to make extra payments on individual loans online, by phone or by mail with instructions to apply the extra payments to specific loans.

You can also schedule recurring extra payments with Auto Debit.

For maximum benefit, you should target the extra payments to unsubsidized loans, loans with high balances, or loans with higher interest rates — whichever will save you more money in the long run.

8. How do you ensure that MOHELA correctly allocates your extra payment?

You should submit special instructions to MOHELA whether you have a one-time, or recurring, extra payments.

For a one-time special payment, send your instructions using one of the following methods:

Online: Log in to make payments to specific loans. When you’re on the “Pay Online” screen, select “Pay A Different Amount” and target your payment to a specific loan or set of loans. The caveat: you can’t target a portion of a consolidation loan online (only by phone or mail).
Phone: Call 888.866.4352 to speak to a MOHELA customer service representative.
Mail: If you are mailing your extra payment, be sure to send specific instructions on a separate document specifying how you would like your payment applied and indicating it is a one-time payment instruction. Also include the amount, disbursement date, and type of loan. You should allow for extra processing time if you use this method.

For recurring extra payments, send your request by mail. Be sure to include specific instructions on a separate signed document specifying how you want ongoing payments applied and indicating it’s a standing payment instruction. Also include the amount, disbursement date, and type of loan.

9. What are your repayment options?

Although you make your payments to MOHELA, it is the Department of Education that provides the repayment options. Your options may vary by the type of loan you have.

Here are the standard repayment options:

Standard Repayment Plan: This plan saves you the most money because it allows you to pay off your loan most quickly — within 10 years if you have unconsolidated loans, and within 10-30 years if you have consolidated loans. However, since the fixed monthly payments are higher, this is not a viable option for borrowers seeking PSLF. By the way, this will be your default option if you don’t choose a repayment plan.
Graduated Repayment Plan: With this plan, you will start with low monthly payments that will increase every two years. You pay off your loan within 10 years if you have unconsolidated loans, and within 10-30 years if you have consolidated loans. This plan may be a good fit for borrowers whose current income is low but expect an increase over time. It’s generally not an option for those seeking PSLF.
Extended Fixed Repayment Plan: If you need to lower your monthly payments, this plan gives you the option to extend your payment period up to 25 years. You will have a fixed monthly payment. To qualify, your outstanding loan amounts must be more than $30,000. This plan is not an option for those seeking PSLF.
Extended Graduated Repayment Plan: This plan also gives you the option to extend your payment period up to 25 years, but your lower monthly payments increase over time. To qualify, your outstanding loan amounts must be more than $30,000. This plan is not an option for those seeking PSLF.

If your income is lower than your debt, however, you have the option to choose from four income-driven repayment plans (IDR). Your payments would be based on a percentage of your discretionary income. The percentage varies based on the plan. Payments for all four IDR plans are recalculated each year and are based on your updated income and family size, so you must update your income and family size each year (even if there are no changes). IDR plans are good options for those seeking PSLF, which forgives the remaining balance on Direct Loans after borrowers have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

Revised Pay As You Earn Repayment Plan (REPAYE) Income Sensitive Repayment: Your monthly payments are generally 10% of your discretionary income. If you haven’t paid back your undergraduate loans in full after 20 years, or your graduate or professional study loans after 25 years, the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.
Pay As You Earn Repayment Plan (PAYE): Your monthly payments will be 10% of discretionary income, but will not exceed what you would have paid under the 10-year Standard Repayment Plan. If you haven’t paid back your loan in full after 20 years, the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.
Income-Based Repayment (IBR): The percentage depends on whether you’re considered a new borrower on or after July 1, 2014, or not. If you are a “new borrower,” your monthly payments are generally 10% of your discretionary income. If you’re not, your monthly payments will be 15% of your discretionary income. If you haven’t paid back your loan in full after 20 or 25 years (depending on when you received the loan), the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.
Income-Contingent Repayment (ICR): Your monthly payments will be the lower of 20% of your discretionary income or the amount you would pay under a fixed repayment plan over 12 years. If you haven’t paid back your loan in full after 25 years, the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.

If any of the IDR plans will make your student loan debt more manageable, you can apply to the Department of Education at StudentLoans.gov to enroll and to update your income and family size, once annually.

The last repayment option is for low-income borrowers with FFEL Program loans.

Income Sensitive Repayment (ISR): This plan is only for FFEL loans. If you qualify, your monthly payments will increase or decrease based on your annual income, but must cover at least the accrued monthly interest. The maximum ISR term is 10 years, but it may be extended for up to 5 years.

Before you choose a repayment plan though, you should use MOHELA’s Repayment Plan Evaluator after logging in OR the Repayment Estimator on StudentLoans.gov, to help you figure out what your approximate monthly payment would be.

10. What if you’re having trouble paying back your loans?

Get in touch with MOHELA right away if you’re struggling to make your monthly payments. You don’t want a situation where your loan becomes delinquent or in default, because it will affect your credit score.

An account is “delinquent” the day after a first missed payment, and is deemed “in default” when it is 270 days delinquent. So, if you miss one or two payments, your loan is delinquent. But if you miss several payments, your loan will be at risk of default.

If you have money for your monthly payments but you forget, simply changing your method of payment to Auto Debit will ensure timely payments.

If you can’t afford your monthly payments, however, you need to check into lowering your monthly payments. Here are a few options:

You can apply for IDR plans, which are based on your income, family size and state of residence, at StudentLoans.gov. To determine which IDR plan is best for you, you should have your loan details — current loan balances, loan program and interest rate of each loan, and how many months you have been repaying your loan — available. Reminder — more details are in the “repayment options” section.
If you have multiple federal loans, you can apply to consolidate some or all of the loans into a single loan called a Federal Direct Consolidation Loan through StudentLoans.gov. In your application, be sure to note if you are interested in PSLF. The consolidated loan will bear a fixed interest rate based on the average of the interest rates on the loans being consolidated. There is NO application fee. Once consolidated, you will have a single monthly payment to make for all the loans you consolidated. Check out the potential advantages and disadvantages before you apply for consolidation.
Another option is to refinance your loans through private lenders. Refinancing, like consolidation, allows you to roll multiple loans into one loan. Your interest rate is typically determined by your credit score. The caveat: borrowers who refinance federal student loans lose benefits provided by federal loans, including access to IDR plans that may qualify them for loan forgiveness after 10, 20 or 25 years of payments.

If you’re in a situation where you need to postpone your monthly payments temporarily, you have two options: deferment or forbearance. Both programs could have a major impact on the amount you have to pay back. Neither program is ideal, particularly if you’re working towards loan forgiveness as it may delay the time it takes to qualify for loan forgiveness. A better option may be to apply for IDR plans instead.

The bottom line

To ensure compliance with your loan obligations and for maximum savings, you should learn the terms of each of your federal loans. And don’t hesitate to contact MOHELA if you have any questions, issues or concerns.