Navigating Federal Student Loans: An Overview of the Department of Education and MOHELA

The process of managing federal student loans can seem complex, involving various entities and procedures. This article aims to provide clarity on the roles of the Department of Education (ED) and the Missouri Higher Education Loan Authority (MOHELA), offering guidance on loan repayment, potential forgiveness programs, and staying informed about your student loans.

Understanding the Roles: Department of Education and MOHELA

It is important to distinguish between the roles of the Department of Education (ED) and MOHELA. ED determines the eligibility of employment and payments towards Public Service Loan Forgiveness (PSLF). MOHELA is a loan servicer that manages the repayment of federal student loans on behalf of the ED. When it comes to forgiveness, MOHELA receives a file from ED to process. Refunds are issued directly from the Department of Treasury.

MOHELA's New Loan Servicing Platform

Beginning next month, MOHELA will begin transitioning borrower accounts to their new loan servicing platform that will better serve borrowers. In the coming weeks and months, borrowers will receive a notice of transition from MOHELA that they are about to transition their federal student loans to a new platform. Borrowers will then be notified by MOHELA when the transition is complete, and their loan information has been loaded to the new system. Borrowers should closely read each notice for more details about the transition and instructions for them to follow once their account transition is complete.

Public Service Loan Forgiveness (PSLF) and Temporary Expanded PSLF (TEPSLF)

Many borrowers seek loan forgiveness through programs like PSLF and TEPSLF. It is important to understand that months spent in forbearance or deferment would result in forgiveness under PSLF or Temporary Expanded PSLF (TEPSLF).

Staying Informed and Managing Your Loans

Staying informed is crucial for effectively managing your student loans. Here's how:

Read also: Managing Your MOHELA Loans

Sign up for paperless correspondence: This allows you to see your account correspondence faster.
Know About Your Loans: Never borrow more financial aid than you can afford to pay back. Complete the Annual Student Loan Acknowledgment each year you accept a new federal student loan. It's your responsibility to repay your loan.

Repayment Strategies and Options

Understanding repayment options is essential for managing student loans effectively.

Initial Steps Before Repayment

Before beginning repayment of your loans, especially for students with GradPLUS loans, it's vital to understand your loan terms. MOHELA will assist you with a schedule showing the repayment plan, when payments are due and the monthly payment amount.

Finding the Best Repayment Strategy

Log in to StudentAid.gov to find the best repayment strategy to meet your goals. If your monthly payment amount is not affordable, other payment options may be available. The Loan Simulator can help you explore these options.

Billing Statements and Due Dates

Your first billing statement will be sent approximately 21-25 days prior to your due date. We will send these approximately 21-25 days prior to your due date.

Repayment for Direct PLUS Loans

A Direct PLUS loan enters repayment on the date the final disbursement of the loan is made. The repayment start date for a Direct PLUS loan is on the date the student ceases to be enrolled at least half-time. The repayment start date for a Direct PLUS loan is on the date the student ceases to be enrolled at least half-time and will end six months after that date. If your child is enrolled at least half-time and you will not need to make payments.

Read also: MOHELA Payment Options

Parent PLUS Loan Deferment

Parent Plus Deferment form this link will open in a new window. Parent PLUS loan borrowers typically begin repayment six months after your child graduates, leaves school, or drops below half-time enrollment. Each school may define half-time differently.

Interest Accrual

During any period when you are not required to make payments, interest will accrue on your loan. You will start making payments after the loan is fully disbursed (paid out).

Changing Repayment Plans

If you need a different repayment plan. Visit StudentAid.gov for more information.

Understanding Loan Disbursements and Payments

It is important to understand how loan disbursements and payments are processed.

Loan Disbursement and Cancellation

When a loan is disbursed (sent to your school), the amount paid will be applied directly to your original principal balance. These payments are considered a partial or full cancellation of the loan. Note: Transactions applied as a cancellation of the loan reflect differently on your payment history. If you would like the disbursement applied as a cancellation, you can submit your request for this in writing or by sending a Secure Message. Keep in mind that cancellation payments do not pay bills.

Payment Posting Date

The payment date is the date the payment posts to your account.

Federal Student Aid Operations

The Department of Education is committed to ensuring the smooth operation of federal student aid programs.

Core Operations

All core operations are continuing at the federal loan servicers-MOHELA, Nelnet, Aidvantage, CRI, Edfinancial, and ECSI, as well as the Default Resolution Group-including contact center operations, billing, receipt of payments, and deferment and forbearance processing. Borrowers should still make payments on federal student loans.

COD System

The COD System continues to process Direct Loan promissory notes, accept and process data for all programs from schools, and send back responses/acknowledgments. Schools can receive federal student aid funds. The modified processing schedule and Sept. 30, 2025, processing deadline described in recent communications is not impacted by a lapse in appropriations, while ED finalizes its processing and accounting for fiscal year 2025. For more information, refer to the Sept.

FAFSA

Students and their contributors can continue to start, fill out, and submit a FAFSA form at fafsa.gov. The FAFSA Partner Portal is available to schools.

NSLDS

NSLDS Professional Access is available to all authorized users. NSLDS users can request and receive both automated and on-demand reports.

SAIG

The TDCM Web Portal and the FTI-TDCM Web Portal are operational. Schools can continue to submit eligibility actions using FSA Partner Connect. We will address all applications submitted during the closure after the government reopens. All schools currently on HCM2 may submit a reimbursement claim during the lapse in appropriations.

FFEL Program Lenders and Guaranty Agencies

FFEL Program lenders and guaranty agencies will continue their operations during the lapse in appropriations.

Key Deadlines

NSLDS Data Reporting

Oct. 1, 2025, is the deadline for reporting data to NSLDS for the Financial Value Transparency and Gainful Employment (FVT/GE) 2025 cycle. The draft Completers List for the 2025 cycle will be generated after the federal government reopens. Institutions will have at least 60 days to make any corrections to their data in NSLDS following receipt of the list. If you are experiencing issues accessing NSLDS, you may report FVT/GE data after the published deadline.

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