Student loan payment restart marred by errors, from late notices to incorrect bills

The first month of repayments since the end of a three-year pandemic pause on federal student loans has been filled with mishaps, including incorrect billing amounts and late notices for bills coming due, according to government officials.
Among the issues: 830,000 people missed their first payment since the pause was lifted after a loan servicer failed to send out timely notices to 2.5 million borrowers, the U.S. Department of Education said on Monday.
Some people received their bills just seven days before payment was due, despite the Education Department requiring at least 21 days’ notice. MOHELA, one of the nation’s largest student loan servicers, was responsible for the delayed billing notices and the Department of Education withheld $7.3 million in revenue to MOHELA as a consequence, the department said. (MOHELA did not respond to a request for comment.)
An internal memo to high-level officials at the Department of Education also reported that an additional 21,000 people have received incorrect student loan bills since the restart began, a department spokesperson told ABC News, and 16,000 borrowers received bills despite falling under a category of borrowers whose debts are supposed to be canceled because their colleges had been deemed fraudulent by the department.
Those issues come as the Education Department has already frozen interest and payments for 420,000 people who enrolled in a new repayment program rolled out this summer and then were quoted the wrong amount on their recent bills, the department spokesperson confirmed. The SAVE Plan, which is a new income-driven repayment plan, was intended to lower monthly payments for the majority of borrowers but some people actually saw their bills increase.
In total, the publicly reported errors add up to more than 1.3 million people who have been embroiled in billing snafus — though the true number is likely higher.
Variations of these mistakes were documented in an October report by the Consumer Financial Protection Bureau, which reviewed more than 9,000 complaints submitted by borrowers over roughly the last year — indicating some of the problems started before repayments resumed on Oct. 1. (During the pause, borrowers could elect to still make payments if they chose.)
The complaints, which were higher in volume than in previous years,