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Why Is My MOHELA Loan in Forbearance?

Published in Student Loan Forbearance 3 mins read

Your MOHELA loan is likely in forbearance because a federal court recently blocked the implementation of the SAVE Plan, leading the U.S. Department of Education to direct loan servicers like MOHELA to pause payments for certain borrowers.

This action was taken to comply with the court order and prevent incorrect billing, specifically for borrowers who were either already enrolled in the SAVE Plan or were about to have their monthly payments lowered under its terms.

Understanding the Forbearance

Forbearance is a temporary postponement of student loan payments. In this specific situation, it's an administrative measure taken due to a legal challenge to a key repayment plan.

Key Reasons for This Forbearance

  • Federal Court Block on SAVE Plan: A recent federal court ruling temporarily halted the nationwide implementation of the new SAVE (Saving on a Valuable Education) Plan.
  • Department of Education Directive: To comply with this court order and avoid billing errors, the Education Department instructed MOHELA and other servicers to place affected borrowers into administrative forbearance.
  • Preventing Incorrect Billing: The primary goal of this forbearance is to prevent borrowers from being charged incorrect amounts while the legal status of the SAVE Plan is being resolved.

Who is Affected?

This specific forbearance typically impacts:

  • Borrowers who had successfully enrolled in the SAVE Plan.
  • Borrowers whose applications for the SAVE Plan were pending and would have resulted in lower payments.

If you fall into one of these categories, MOHELA likely placed your loan into forbearance automatically to ensure you are not adversely affected by the legal proceedings.

What Does This Mean for You?

When your loan is in forbearance:

  • Payments are paused: You are not required to make payments during this period.
  • Interest may accrue: While payments are paused, interest generally continues to accrue on all types of federal student loans. However, for administrative forbearances initiated by the Department of Education, interest may be waived or covered, depending on the specific terms set by the Department. It's crucial to confirm this with MOHELA.
  • Credit impact: Forbearance generally does not negatively impact your credit score, as it is an approved pause in payments.
  • Count towards repayment timelines: Payments made before the forbearance and after it ends will count towards your repayment timeline (e.g., for Public Service Loan Forgiveness or income-driven repayment forgiveness).

Next Steps and What to Expect

It's important to stay informed about your loan status and any updates regarding the SAVE Plan.

  • Check Your MOHELA Account: Regularly log into your MOHELA account to see your current loan status, forbearance end date, and any notices.
  • Monitor Official Announcements: Keep an eye on announcements from the U.S. Department of Education and MOHELA for updates on the SAVE Plan and the status of this administrative forbearance. You can often find official information on the Federal Student Aid website.
  • Consider Your Options: While in forbearance, you can explore other repayment options if you wish, though typically, borrowers in this administrative forbearance are simply waiting for clarity on the SAVE Plan.
  • Prepare for Resumption: Once the forbearance period ends, your payments will resume. Ensure your contact information is up to date with MOHELA so you receive timely notifications about your new payment due date and amount.

This forbearance is a temporary measure designed to protect borrowers from billing complications arising from the legal challenge to the SAVE Plan.