Education Dept. will transfer some student loan borrowers to a new servicer [Video]

If your current federal student loan servicer is Mohela, or the Missouri Higher Education Loan Authority, the U.S. Department of Education said it will soon transfer some student loan borrowers to different servicers.

Here’s what you should know about the change.

The Education Department began transferring a portion of Mohela’s borrowers this week to different companies, it said in an April 29 blog post.

More than 1 million borrowers may be impacted.

“A different servicer will begin managing these loans and assisting these borrowers,” the department said.

The Education Department contracts with different companies to service its federal student loans, including Mohela, Nelnet and EdFinancial. It pays the servicers more than $1 billion a year to do so, according to higher education expert Mark Kantrowitz.

Mohela requested the transfers, the Education Department said, but the company has also been a magnet for controversy of late.

At the end of October 2023, the government accused the servicer of failing to …