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 paused temporarily as the Department of Education revamps the program. 

The Public Service Loan Forgiveness (PSLF) program will move from being serviced solely by company Mohela, and will instead be managed in-house by Federal Student Aid. 

The PSLF program, which was created in 2007, writes off the remaining balance of borrowers who work in public sector or government jobs after 10 years of eligible repayment.    

Moving providers is expected to last through July, and impact around 2 million borrowers enrolled in the program.

This means some borrowers may experience delays in their debt being cancelled, and will have to wait until after the pause. 

Student loan forgiveness for public sector workers including teachers, nurses and firefighters will be temporarily paused from May 1

It comes as servicer Mohela (The Missouri Higher Education Loan Authority) also quietly announced that it will no longer be managing over a million separate 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 revamp of the federal student loan system in order to streamline the processing of debts and improve the 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 managed directly through Federal Student Aid.  

'From May 1 through July, borrowers will not be able to see their PSLF payment counts on MOHELA's website, and any forms submitted for PSLF will not be reviewed,' the Department of Education wrote in a statement.

Borrowers will still be 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.

If they reach their 120th qualifying payment, which means they are able to apply for relief, they will have to wait for their debt to be cancelled.

'Borrowers who qualify for forgiveness during the pause can request a forbearance from their servicer and any additional payments made will be refunded to the borrower or applied to their other outstanding federal student loan debt,' the Department said. 

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

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

Borrowers will also be able to call the Department of Education's contact center directly if they have questions about the status of their debts, in a bid to improve customer service and speed up processing times. 

Since 2022, Mohela has been the sole servicer of the Public Service Loan Forgiveness (PSLF) program, which has been a key focus of the Biden administration's recent forgiveness initiatives

The PSLF program has long been criticized for poor communication between the Education Department, loan servicers and borrowers - and errors keeping track of payment counts.

Workers frequently found that all or some of their payments did not count because they were enrolled in a plan not covered by the initiative.   

The Biden administration has broadened the eligibility of the program, cancelling around $62.8 billion in debt for 876,000 borrowers to date.

Overall, the administration has approved almost $160 billion in forgiveness after announcing a further $6 billion in debt cancellation Wednesday. 

Mohela has also faced widespread criticism of its handling of the program. 

In March, Massachusetts Senator Elizabeth Warren called on chief executive Scott Giles to testify before Congress amid reports of 'widespread servicing failures' impacting 'at least 40 percent of its borrowers.' 

In March the Massachusetts Senator invited Scott Giles, the chief executive of servicer Mohela, to testify before the Senate banking committee

Deborah Soto thought she had paid off all the student loans for her daughter Elena (middle) before the end of the pandemic-era interest pause in September last year, but was shocked to find that another loan totaling $16,947 had suddenly appeared in her account

DailyMail.com asked its readers to get in touch if they had been left frustrated by the service they had received from the servicer - and received scores of responses from graduates concerned about their loans. 

Some were left baffled by the monthly repayment amount they had been given, others had seen their loan forgiveness delayed, while others had outstanding debts they believed they should not have to pay off.

And many of them complained about a practically non-existent customer service which left them waiting hours on the phone with no answers.

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

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

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