MOHELA Federal Student Loan Transfer: What Borrowers Need to Know

The Department of Education will begin moving federal student loan accounts away from MOHELA to other servicers by the end of 2025. Your loan terms—interest rate, repayment plan, and forgiveness eligibility—are supposed to stay exactly the same.

What can change is whether your payments get applied correctly, whether your balance suddenly looks wrong, or whether your payment history shows up missing after the transfer. Those are the errors that tend to pop up whenever loans change hands, and they matter most if you’re counting months toward forgiveness.

Officially, the government calls this a “seamless transfer.” In reality, every prior transfer has created mistakes that borrowers had to catch and fix themselves. That’s why the smart move right now is to treat this transfer like a risk moment: document your account, know what shouldn’t change, and be ready to act if something does.

The Department of Education says it is “rebalancing accounts” across its servicers. In practice, this transfer comes after months of failures and pressure on MOHELA to clean up its record.

• Billing breakdowns: 2.5 million borrowers didn’t get bills on time, 800,000 fell delinquent because of it, and more than 280,000 were billed the wrong SAVE payment amount.

• Customer service collapse: MOHELA had the longest call waits in the system (often nearly 40 minutes) and the highest call abandonment rate. Emails often went unanswered for weeks.

• Credit reporting errors: A Senate investigation found MOHELA was linked to nearly 2 million duplicate credit report entries, with over 100,000 borrowers seeing the wrong score on their credit.

• Legal and political pressure: State attorneys general from New York to Illinois have active investigations. The American Federation of Teachers sued MOHELA for misleading borrowers. Senator Elizabeth Warren held hearings blasting its failures.

The move isn’t about you personally. Your loan isn’t being sold — it’s still federally owned. Your interest rate, repayment plan, and forgiveness eligibility aren’t changing. What’s changing is which servicer processes your payments and fields your questions.

The Education Department has already pulled Public Service Loan Forgiveness (PSLF) in-house because servicers couldn’t be trusted to track it correctly. Now it’s doing the same with a chunk of MOHELA’s accounts.

When the Department of Education moves loans from one servicer to another, the handoff follows a standard playbook. About two weeks before the move, MOHELA should send you a notice that your account is being transferred. On the scheduled date, your loan information shifts over — your loan isn’t sold, it stays federally owned, but billing and customer service are now handled by the new servicer.

It usually takes about 10 business days for your new servicer to finish loading your full account details. During that window, you may see incomplete balances or missing history. Once the setup is complete, you’ll get a welcome letter or email with a new account number and login instructions.

Payments made to MOHELA after the transfer date are supposed to be forwarded for at least 30 days and often up to 90, but it’s safer to start paying through your new servicer as soon as your account is active. Autopay is supposed to transfer too, but in practice it’s hit-or-miss — it’s best to log in with your new servicer and re-enroll.

The important thing to keep in mind is that your loan terms don’t change. Your interest rate, repayment plan, and forgiveness eligibility all stay the same. What can feel jarring is the temporary “weirdness” that comes with the data handoff — balances that don’t look right, histories that take time to reappear, or forgiveness counts that lag. Keep making your payments as usual and save confirmation numbers until you see them posted correctly with the new servicer.

Related: Did MOHELA Take Over Navient?

Every time federal loans switch servicers, some borrowers get tripped up by errors. The transfer doesn’t change your interest rate, repayment plan, or forgiveness eligibility — but it can scramble how those details show up in your account.

• Payments and Autopay. One of the most common headaches is payments not posting the way they should. Autopay may not carry over cleanly, leaving accounts marked “past due.” Some borrowers see their payment drafted from their bank but not applied to the loan record, or applied only to part of their loans.

• Balances and History. It can take weeks for a new servicer to display your full balance and history. During that time, accounts sometimes show missing payments, unexplained capitalized interest, or balances that don’t match what you saw before the transfer.

• Forgiveness Tracking. If you’re working toward Public Service Loan Forgiveness or income-driven repayment forgiveness, your official counts are stored with the Department of Education. But after a transfer, it’s common for those counts to disappear from your servicer dashboard or lag behind for months, creating confusion about whether progress is being credited.

• Credit Reporting. Transfers are also a flashpoint for credit mistakes. Past investigations found MOHELA and other servicers reporting duplicate loans or late payments that weren’t actually late. Even if the error is eventually fixed, a temporary hit to your credit score can cause real-world problems. Monitor your credit report during the 60 days after transfer and dispute any incorrect late payment reports immediately.

• Account Access Issues. During the transition window, you may be temporarily locked out of your account or encounter error messages. This is typically temporary but can last several days, making it impossible to verify payments or check balances during a critical period.

These errors don’t happen to everyone, but they happen often enough that you should expect them as a possibility. You can’t control whether the transfer goes smoothly — but you can control whether you catch mistakes early. That’s where preparation matters most.

Related: Do Student Loans Affect Credit Score?

You can’t stop the transfer from happening, but you can insulate yourself against the most common errors. Four simple steps cover most of it:

1. Download your records. Save your payment history, recent statements, and screenshots of your balance, repayment plan, and forgiveness counts if they’re visible. Keep everything in one folder.

2. Keep paying and save all confirmation numbers. If you can’t access your account to verify payments posted, keep every electronic receipt until you can log in with your new servicer. Don’t skip payments during the handoff. If you pay MOHELA and your account has already moved, the payment should be forwarded — but save the confirmation number until it posts at the new servicer.

3. Create your new account. As soon as your welcome letter arrives, set up online access.

4. Re-enroll in autopay. Even if it claims to transfer automatically, don’t trust it. Log in at the new servicer and re-establish your settings.

That’s the extent of your control. If errors show up later — a missing payment, a wrong balance, or a dropped forgiveness count — having your own records makes it much easier to get them fixed.

Related: What Happens to Student Loans if The Department of Education is Abolished?