President Joe Biden.
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The Education Department confirmed 305,000 student-loan borrowers had payment errors.The department instructed servicers to place those borrowers on administrative forbearance.They are not supposed to have any payments due until the issues are resolved.
Thousands of student-loan borrowers have faced issues with their payments as they started footing another monthly bill once again.
President Joe Biden’s Education Department confirmed to Insider on Friday that about 305,000 borrowers have received inaccurate monthly payments from their servicer — less than 1% of the 28 million borrowers entering repayment. While the department initially projected the errors impacted about 420,000 borrowers, it said “additional oversight efforts” led to a revision of that estimate.
“While we regret any error, the Department is working closely with student loan servicers to ensure that they are providing borrowers the information they need and holding servicers accountable when they do not,” a department official told Insider.
“When the Department identified these problems, we immediately directed servicers to notify affected borrowers and put them into administrative forbearance until their correct payment amount was calculated, so there would be as little impact as possible on borrowers,” the official said.
The official added that “borrowers will not have payments due until these mistakes are fixed.”
After over three years, the student-loan payment pause ended in September when interest started accruing again on federal borrowers’ balances. Bills starting becoming due in October, and borrowers have encountered a host of issues, from much higher payments than initially projected, hours-long hold times with customer service, and technical issues that locked them out of their accounts.
Some borrowers have reported inaccurate bills under the new SAVE income-driven repayment plan, which the Education Department rolled out over the summer to give borrowers more affordable monthly payments. However, many borrowers were surprised to see their payments much higher under SAVE. For example, Ann Currie — a borrower with $60,000 in student debt — previously told Insider her servicer gave her a $47 monthly payment estimate, but she later saw in her account she had a $175 payment due.
“They’re requiring me to pay something that I can’t afford to pay on right now,” Currie said. “I do want to pay something, but I’m not able to pay that amount that they’re requiring me to pay.”
It’s unclear if servicers have effectively placed all borrowers with account issues on administrative forbearance, but it’s an issue a group of state attorneys general recently stressed to Biden and Education Secretary Miguel Cardona.
“While many of the problems associated with the return to repayment may not be avoidable at this stage, we believe the Department can and should do more to mitigate harm to borrowers,” they wrote.