Hello, I am hoping you can help shine some light on what went wrong for my wife and I. My wife is currently paying off her Master’s while I am making payments on my Bachelor’s, with both of us working in public sector positions. My wife is a school teacher, and we have both been working for approximately 7 years. In that time we have both had our loans consolidated into Federal Direct Loans, with my wife’s loans currently being managed by Mohela.

Today my wife called Mohela to defer her loan payments for a year since she is going to take a year off to take care of our newborn. While doing so she was informed that although she had in fact consolidated her loans into the standard direct loan payment program, it was not the CORRECT standard loan payment! They proceeded to try and get her to reconsolidate her loans into what they allege is the correct program.

We have been paying our loans for 7 years and have made every single payment on time. My wife makes $360 payments every month for her loans alone while making a whopping $45,000 gross a year. This entire time we were under the impression that her loans would be forgiven in 3 more years (she has even filled out all the paperwork but I also just found out today she has never bothered to send it in, which is a separate annoyance). Now we are told that we will need to consolidate our loans again and start the 10 years from scratch. I can find nothing online about the PSLF program that would suggest there is anything so specific about it that our loans would suddenly not qualify, nor can I find a simple list of what loans are eligible and which are not. Everything I read simply states that 120 on time payments must be made on a Direct Consolidation loan, which is what we have been doing.

This seems like such a scam to me. At this point I doubt it is even worth starting over, as the new loan they will put us into will probably just be a higher monthly payment anyway. Do you have any idea of what might have gone wrong so others can avoid this same fate, or possibly a solution that would prevent our clock restarting at 0? We haven’t even called to see if I’m in the same boat yet, though I wouldn’t be surprised to find I have the same issue. I don’t know why they even bother with these programs when it’s obvious they overcomplicate them with the intention of preventing anyone from taking advantage.

Thanks for any advise you can give.

What kind of repayment plan were you guys on? I know it is over complicated, and if you mess up one fine detail, they won’t budge because they are government. As mentioned by Heather in these forums, you have to work at the right type of job, be on the right repayment plan, and have the right types of loans. The 120 payments only count if you are on the standard 10-year, IBR, ICR, or PAYE repayment plan. If you ARE in one of those repayment plans, then your payments will count, and you have to send in your employee certifications (a big PITA, because the loans transfer to FedLoan servicing, and you are in limbo for a month or two). However, The 20-year and 30-year repayment plans will not count towards PSLF. If all of your loans are in the Direct program, there is absolutely no need to consolidate again, and I’d advise against it, as your interest will become slightly higher, due to their rounding up to the nearest 1/8%.