Thanks again, Congress:
For-profit and nonprofit student loan companies alike lobbied over the change and shifted their business models accordingly. In particular, the nonprofit student loan companies won a carve-out to ensure they’d get in on the business of servicing the direct federal loans. The carve-out was crafted and lobbied for by the Education Finance Council, a trade group representing nonprofit student loan companies that spent more than $200,000 on lobbying that year. (The Education Finance Council did not respond to a request for comment.)
Now, two years later, borrowers are experiencing the effect of the law.
Borrower Karen Mahnk said she logged into the Department of Education’s student loan website in October and saw that her loan balance — which typically hovered around $100,000 — was suddenly zero. When she called around, her servicer told her that she had been put in an administrative forbearance.
If, like me, you went to college on a direct student loan from the US government; and recently your loan was mysteriously transferred to a company you’ve never heard of, you need to read this article on ProPublica: Student Loan Borrowers Dazed and Confused by Servicer Shuffle. My monthly payment went up when my payments were transferred to Mohela, and since I switched banks a few months ago they have been chronically unable to correctly process my “automated” monthly payments. If you’re having problems with Mohela, you’re not alone. If you haven’t had problems with them yet, brace yourself.