Consumer complaint received 2026-04-23 00:00:00
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Need information about your loan balance or loan terms
Company: MOHELA
State: CA

Complaint narrative:
XXXX Dear Federal Student Aid ( FSA ) Representative and MOHELA, I am writing to request clarification regarding the Income-Driven Repayment ( IDR ) application process on StudentAid.gov, specifically in relation to loan consolidation and the current court-ordered changes affecting IDR plans. As part of the online IDR application process, I am prompted with the option to consolidate my loans. I am seeking clear guidance to ensure that selecting consolidation will not negatively affect my eligibility, payment count, or timing under the ongoing IDR account adjustment. I am referencing the official FSA guidance titled IDR Plan Court Actions : Impact on Borrowers ( last updated XX/XX/XXXXXXXX ), which states in part : On XX/XX/XXXX, a federal court issued an order preventing the U.S. Department of Education ( ED ) from implementing the SAVE Plan and parts of other income-driven repayment ( IDR ) plans. The order impacts implementation of certain IDR provisions and requires borrowers in SAVE-related forbearance to select a new repayment plan. XXXX is working to update systems to reflect IDR payment counts and history in compliance with this court order. Some consolidation-related rules, including how payments are counted under consolidation loans, have been affected by the court action. Based on this, I am requesting written clarification on the following : Whether consolidating my loans during the IDR application process will reset, delay, or otherwise negatively impact my IDR payment count or eligibility for the IDR adjustment. Whether consolidation will affect the application of the court-ordered IDR payment count updates currently being implemented by XXXX/FSA. Whether I should proceed with the IDR application without consolidation in order to avoid any disruption to my repayment history or adjustment eligibility. My intent is to comply fully with all federal requirements while ensuring I do not take any action that could unintentionally reduce or delay my IDR benefits under the current court-ordered system changes. Please provide written guidance so I can proceed correctly. Sincerely, XXXX XXXX XXXX XXXX XXXX XXXX Actions : Impact on Borrowers Fast Facts Borrowers who have loans in forbearance because they enrolled in or applied for the Saving on a Valuable Education ( SAVE ) Plan must select a new repayment plan. The loan consolidation and income-driven repayment ( IDR ) plan applications are available. Servicers are processing applications. Eligible borrowers can apply for or recertify under the Income-Based Repayment ( IBR ), Income-Contingent Repayment ( ICR ), and Pay As You Earn ( PAYE ) Repayment Plans. This page was last updated on XX/XX/XXXX. On XX/XX/XXXX, a federal court issued an order preventing the U.S. Department of Education ( ED ) from implementing the SAVE Plan and parts of other income- driven repayment ( IDR ) plans. While the court order primarily prevents ED from implementing the SAVE Plan, the order does affirm parts of the IBR, ICR, and PAYE Plans. Additionally, the order preserves one provision of the XX/XX/XXXX, rule titled, Improving Income Driven Repayment for the XXXX XXXX XXXX XXXX XXXX XXXX XXXX and the Federal Family Education Loan ( FFEL ) Program. We will continue to update this page when new information becomes available. XXXX XXXX XXXX XXXX XXXX XXXXXXXX Page XXXX of XXXX Review Complaint XX/XX/XXXXXXXX XXXX XXXX What do I need to know about the most recent court actions? With one exception, the most recent court action invalidated most of the XX/XX/XXXXXXXX rule titled Improving Income Driven Repayment for the XXXX XXXX XXXX XXXX XXXX XXXX XXXX and the Federal Family Education Loan ( FFEL ) Program. This includes the following changes to the IDR plans : Calculating a monthly payment amount using the SAVE Plan or Revised Pay As You Earn ( REPAYE ) Plan formulas Applying discharges or interest subsidies under the SAVE Plan Applying a weighted average of payments made on loans included in a consolidation loan to that consolidation loan Allowing defaulted borrowers to access the IBR Plan Importantly, the most recent court action requires that borrowers who have loans in forbearance because they enrolled in or applied for the SAVE Plan must select a new repayment plan and begin repaying their loans. We strongly encourage you to act now so that youre in the plan that best meets your repayment goals. Once youre enrolled in a different repayment plan, make sure you sign up for auto pay ( also known as auto debit ). If you do, your student loan servicer will automatically deduct your payment from your bank account each month. Not only does this help ensure that you make payments on time, but you also will save 0.25 % on your XXXX XXXX XXXX XXXX XXXX XXXX Page XXXX of XXXX Review Complaint XX/XX/XXXXXXXX XXXX XXXX interest rate. Contact your loan servicer to see if your loan is eligible for this interest rate reduction. I have loans in forbearance because I was enrolled in or applied for the SAVE Plan. What does this court action mean for me? If youre a borrower who has loans in forbearance because you enrolled in or applied for the SAVE Plan, you are required to select a new repayment plan. If you dont select a new repayment plan, your loan servicer will move you to a different plan. Use our Repayment Calculator to select a plan that meets your repayment goals. Apply Faster with Federal Tax Information Providing consent eliminates much of the time- consuming work of filling out an application. By electronically importing your financial information, you ensure your application has the most up-to-date data. Plus, having your consent on file means your IDR plan will be automatically recertified each year, if eligible. Without consent, youll be responsible for meeting your annual recertification date. Student Loan Borrower Q & A Is ED processing forgiveness for borrowers enrolled in the IBR, ICR, or PAYE Plans? We resumed processing discharges for the IBR Plan in XX/XX/XXXX. We have updated our systems to resume processing discharges for borrowers enrolled in the PAYE and ICR Plans. What are the criteria for having my loan discharged under the IBR, ICR, or PAYE Plans? Each IDR plan has its own criteria for discharge : XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Review Complaint XX/XX/XXXXXXXX XXXX XXXX IBR Plan ( first loans received after XX/XX/XXXXXXXX ) : 20 years worth of payments IBR Plan ( first loans received before XX/XX/XXXXXXXX ) : 25 years worth of payments ICR Plan : 25 years worth of payments PAYE Plan : 20 years worth of payments Borrowers with loans in default are not eligible for discharge under an IDR plan. Will I be taxed if my loans are discharged under the IBR, ICR, or PAYE Plan? Debt discharged under an IDR plan could create a federal tax liability for you, depending on the effective date of the discharge. The American Rescue Plan Act included a provision temporarily modifying the tax treatment of discharged student loan debt. Specifically, the law excludes from gross income qualifying student loan amounts that are discharged on or after XXXX XXXX, XXXX, and before XXXX XXXX, XXXX. If your loans are discharged on or after XXXX XXXX, XXXX, and before XXXX XXXX, XXXX, you wont be taxed by the federal government. If a borrower meets their IDR repayment milestone before XXXX XXXX, XXXX, but their loans are discharged on or after XXXX XXXX, XXXX, then that discharge is not subject to federal tax. However, the amount discharged could be taxable in some states. We will notify you when your loan is identified as eligible for discharge under the IBR, ICR, or PAYE Plans. You will be provided 21 days to opt out of discharge. How does the most recent court action affect Public XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Service Loan Forgiveness ( PSLF ) buyback? Part of determining the amount of PSLF buyback requires an analysis of the repayment plan that a borrower was on before or after a period of deferment or forbearance. If the start or end date for the period of deferment or forbearance that is being bought back is on or after XX/XX/XXXX, then the amount required to buy back that period of time can not be based on the SAVE Plan formula. If the borrower was not on the IBR, PAYE, or ICR Plan on either side of the period of time being bought back, then we will request income and family size information from the borrower to determine the appropriate buyback amount. When will ED begin to display IDR payment counters on StudentAid.gov? The court actions require that we modify the display of the IDR payment counters, which will require additional system changes. We are working to update our systems to make those changes. Which provision from the XX/XX/XXXXXXXX rule titled Improving Income Driven Repayment for the XXXX XXXX XXXX XXXX XXXX XXXX XXXX and the Federal Family Education Loan ( FFEL ) Program is ED allowed to keep in place? XXXX of the provisions from the XX/XX/XXXX, rule allows time spent in certain deferments or forbearances to count as progress toward loan discharge. We are permitted to allow this time to continue to be credited as progress toward discharge. You can find out more about which deferments or forbearances count toward discharge. XXXX XXXX XXXX XXXX XXXX XXXXXXXX Page XXXX of XXXX Review Complaint XX/XX/XXXXXXXX XXXX XXXX What is happening to the interest subsidy if my monthly payment amount is less than the amount of interest that is applied to my loan payment each month? Due to earlier court actions, the only IDR plan for which the interest subsidy could be applied is the IBR Plan. The interest subsidy is applied only to subsidized loans in the first three years of payments and covers 100 % of the unpaid interest each month. We are in the process of updating our systems to apply the interest subsidy to eligible loans enrolled in the PAYE Plan. What is the effect of the most recent court actions on the changes that will occur as a result of the One Big Beautiful Bill Act ( OBBBA )? While there is not a direct effect, some provisions do overlap. These provisions include the following : Like with the SAVE Plan, borrowers are no longer required to have partial financial hardship in order to enter the IBR Plan. On XXXX XXXX, XXXX, we updated our systems to allow borrowers without partial financial hardship to enroll in the IBR Plan. Borrowers with loans enrolled in the PAYE or ICR Plan must select a new repayment plan no later than XX/XX/XXXX. Borrowers who have a new loan, including a new consolidation loan, made on or after XX/XX/XXXX, will have limited options for enrolling in an IDR plan. We will continue to update the OBBBA announcement page when new information is available. This page was last updated on XX/XX/XXXX.

Company response to consumer: Untimely response