MOHELA Student Loan Refinance Guide: Find Out If and How You Can Refinance

Missouri Higher Education Loan Authority, or MOHELA, has been in the student loan industry for over four decades. While many borrowers may be familiar with MOHELA as a private student loan lender, this nonprofit institution is also a federal student loan servicer. 

MOHELA first began servicing federal student loans in 2011, and it now manages all PSLF accounts and TEACH Grant recipients. This transfer of accounts from FedLoan Servicing was completed at the end of September 2022.

This new servicing responsibility resulted in more federal loans being transferred to MOHELA. Therefore, as loans change hands, many borrowers may begin to explore refinancing options. Some borrowers may want a lower interest rate, while others may be looking for a better customer experience. But refinancing isn’t always the best solution, and choosing a lender requires careful consideration.

Here’s what you need to know about MOHELA student loan refinance options.

What is MOHELA?

MOHELA was established in 1981 as a public agency in the state of Missouri. Since then, it has further established its brand in the student loan industry.

It currently holds $669 million in Federal Family Education Loan Program (FFELP) loans and $107 million in private student loans. But MOHELA also services over $357.6 billion of Federal Direct Loan Program (FDLP) and third-party private student loans. 

Understanding MOHELA’s role in handling these different loan types can become a little confusing. MOHELA functions in the following capacities for student loan borrowers:

• As a private lender. MOHELA finances, owns and manages its own private loans internally.
• As a servicer for federal and private student loans. MOHELA is contracted as a third-party servicing provider, but these loans are owned by another private lender or the U.S. Department of Education.

When functioning as the federal loan servicing provider, MOHELA manages the repayment process only. It doesn’t own the actual loan.

If MOHELA is currently your federal loan servicer — or if it becomes your servicer in the future — its primary roles are to collect payment and assist you with repaying your loans. But the government will continue to own your loan, and the servicer for your loan could change again in the future.

Loan servicing responsibilities include providing you with repayment options (e.g., access to income-driven repayment plans) and loan guidance. But this guidance is often within a limited scope, which means there may be a better route for your unique situation.

“It might be in my best interest to refinance, but I can’t get a straight answer from MOHELA.”

January 2024 Student Loan Planner Reader Survey

Can I refinance my MOHELA student loan?

If MOHELA services your student loans, you might be eager to explore other options through refinancing.

The biggest benefit of refinancing is the ability to tap into lower fixed and variable rate loan offers. This could save you a significant amount of money over the life of your loan. 

Other MOHELA student loan refinance benefits may include:

• Adjusting your monthly payment amount either by reducing your interest rate or changing your repayment terms.
• Streamlining your repayment by combining multiple student loans into one new loan amount.
• Removing a cosigner from your student loans.

Refinancing can also give you a chance to switch to a new lender with better customer service or one with additional perks (e.g., generous autopay discount for borrowers who enroll in automatic payments, career or financial coaching services, etc.).

In terms of borrower feedback, MOHELA received the lowest reader rating from our January 2024 Student Loan Planner Reader Survey. Many of our readers reported MOHELA complaints related to long wait times, inaccurate information, misleading advice and a general lack of knowledge from representatives.

But poor customer service shouldn’t be your driving force for wanting to refinance, especially if you have federal student loans.

What to consider before refinancing federal student loans

Anytime you refinance a federal loan with a private lender, you lose access to federal benefits and protections. For example, you won’t be able to take advantage of flexible income-driven repayment (IDR) plans or apply for forbearance or deferment. You also won’t meet eligibility requirements for student loan forgiveness programs like Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness or IDR forgiveness.

As a general rule of thumb, borrowers with federal student loans should consider refinancing if you:

1. Work in the private sector for an employer that doesn't qualify for PSLF.
2. Have a solid emergency fund.
3. Owe less than 1.5 times your annual income.

For example, let’s say you have a $100,000 salary working as a marketing manager for a private company and only owe $75,000 in federal student loans. Because you owe well under 1.5 times your income (which would be $112,500 in this case), there’s a good chance you’d benefit the most by refinancing to a lower interest rate and aggressively paying off your loans in less than 10 years.

But if you work in the public sector, say for a local government entity or nonprofit organization, you’d likely save the most money by taking advantage of PSLF and avoiding refinancing altogether.

How to voice your MOHELA concerns

If you want to keep your federal student loans and, therefore, stay with MOHELA as your loan servicer, you have some options to resolve issues you might be having.

You can complete a formal request and file a complaint directly with the MOHELA Ombudsman. The request can be faxed to 866-222-7060 or sent by mail to: MOHELA Ombudsman, 633 Spirit Drive, Chesterfield, MO 63005.

MOHELA's website includes a like to the Massachusetts Ombudsman with a form to fill out. But it's exclusive to residents of the state of Massachusetts.

If you live in another state, you can submit a complaint or concern to the Federal Student Aid Feedback Center.

Refinance MOHELA loans with a plan

For borrowers interested in paying their student debt in full and as quickly as possible, student loan refinancing is the way to go. You can get a new interest rate or a better loan term to fit your current financial needs.

If you already have private student loans, shop around for lower interest rates at least once per year. You can refinance as many times as you want, and you might even get cash-back bonuses from Student Loan Planner®’s lending partners.

If you have federal student loans, you should consider refinancing only if you’re confident you won’t need federal loan benefits. You might be able to lower your student loan payments by switching to an IDR plan that is based on your income rather than how much you owe. With this strategy, you’ll keep all the benefits federal student loans offer while likely paying less each month than you would if you were to refinance.

With so many pros and cons to weigh, it’s best to get customized student loan advice to maximize your savings. Our team of student loan experts can walk you through various student loan repayment options tailored to fit your student loan situation and career goals. Schedule a one-hour consultation to get started on the most efficient repayment path for you.