Some Student Loan Borrowers Must Reapply for IDR Plan—Here’s What to Do If You’re Affected
If MOHELA services your student loan, you may need to reapply ASAP to stay in your IDR plan
With more than 12 million student loan borrowers currently enrolled in repayment plans based on income, it can be quite worrisome when there’s a snafu in the system. If things don’t run smoothly, it can impact people’s eligibility to make payments that are more reasonable for their family situation. In yet another setback, some borrowers now must take extra steps to secure their eligibility for their current plan through the next year. Keep reading to learn more about what student loan servicer is asking some borrowers to reapply for their IDR plan and what to do next.
What is happening with student loan IDR plan applications?
Back in March, student loan borrowers were in for an unpleasant surprise when the applications for income-driven repayment (IDR) plans were closed. This was following a decision from a federal circuit court of appeals that blocked the Saving on a Valuable Education (SAVE) plan that was put in place by the Biden administration.
At the time, there was no indication of when—if ever—the applications would open again to both current and future borrowers looking to enroll in an IDR plan. Luckily, they became available again in just a couple of weeks after the American Federation of Teachers filed a lawsuit arguing the suspension was unlawful.
Now, however, some borrowers may be encountering yet another issue with their IDR applications, reports Forbes. MOHELA, also known as the Higher Education Loan Authority of the State of Missouri and one of the Department of Education’s contracted loan servicers, announced on its website that some people will have to reapply for their payment plan.
What is an income-driven repayment plan?
There are currently four IDR plans available for borrowers: SAVE, IBR, PAYE and ICR plans— a.k.a. Saving on a Valuable Education, Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment plans. All of these were created to allow eligible people to have their monthly payments adjusted based on income and family size.
To stay on any of the plans, the borrower must recertify their loans annually, which means providing proof that they still qualify.
The Federal Student Aid website tells borrowers this means, “You update us with your income and family size information so that your servicer can recalculate your payment. You must do this even if there has been no change in your income or family size.”
If you don’t recertify your loan, your monthly payment could go up. In some cases, you could be removed from an IDR plan altogether since the servicer will assume your family size is one.
What this means for student loan borrowers
Anyone who has MOHELA as a loan servicer may need to take an extra step to ensure their loans are recertified and avoid any negative consequences.
“Thanks to system updates, MOHELA can now quickly process applications with verified income,” the company wrote on its website. “If you applied before April 27, 2025, your application didn’t include income info. Please reapply at StudentAid.gov for faster processing. Your old application will then be canceled automatically.”
No further information was provided as to why this error occurred. Forbes reports that MOHELLA is also the only Department of Education loan servicer to appear to have any issues. Aidvantage, Edfinancial and Nelnet have not shared any similar announcements with their borrowers.
Not sure if your loan or loans are with MOHELA? You can log into your Federal Student Aid account to see information about your loans, repayment status and servicer.
If you applied prior to that April 27 date, you’ll want to fill out the online IDR application again to maintain your current monthly payment under your plan.
Why MOHELA is under fire
This isn’t the first incident that has put MOHELA in a negative light. The company is currently under investigation for mishandling borrowers’ accounts. Billing customers, processing paperwork and calculating monthly payments are just some of the administrative tasks that were frequently filled with errors.
In summer 2024, a lawsuit was also filed in which MOHELA was accused of both misleading and misinforming borrowers about repayment options. Now many state attorneys general are trying to get more information about what’s going on behind the scenes.
Can I switch student loan servicers?
If your loan or loans are with MOHELA, you may be worried about future mistakes or customer service issues and want to change your loan servicer. It is possible to do so, but it is currently only an option if you consolidate your loans.
Consolidating means combining some or all your federal loans into a Federal Direct Consolidation Loan, which offers some federal benefits like Public Service Loan Forgiveness and a fixed interest rate. (Note: it can lead to a slight increase in interest rate in the short-term).
Even if you don’t want to consolidate your loans, if you’ve had rather serious problems with any loan servicer provider, it’s encouraged to report it.
“If you feel your current loan servicer has done something especially egregious, you may submit a complaint with proof of your claim,” shares the Federal Student Aid website.
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