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Billing Errors Plague Student Loan Repayments, Prompting Department of Education Action

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Department of Education Takes Action Against Billing Errors Affecting Millions of Student Loan Borrowers

The Department of Education is taking action against loan servicers due to widespread billing errors that have plagued the return to student loan payments. (Photo:

Challenges and Consequences: Examining the Root Causes of Student Loan Billing Errors

According to source, the return to student loan payments has been marred by a multitude of billing errors, prompting the Department of Education to take decisive action against loan servicers. The Education Department is now mandating that these servicers reimburse affected borrowers for billing errors, including overdraft fees and interest charges resulting from erroneous billing information. Approximately 2.7 million federal student loan borrowers have encountered significant issues with their loan servicers since payments resumed in October, and many of them will be eligible for reimbursements or refunds due to these billing errors.

These billing errors are primarily attributed to the substantial challenge of transitioning tens of millions of borrowers back into the payment system simultaneously, following the expiration of the student loan moratorium. Private loan servicing companies, such as Edfinancial, MOHELA, Aidvantage, and Nelnet, are tasked with managing this monumental shift while implementing the Biden administration’s new student loan repayment plan, SAVE, during a backdrop of errors.

The Department of Education’s memo underscores several key issues faced by nearly 3 million borrowers, encompassing late or missing billing statements, improper notification of new payment amounts, inaccuracies in monthly bills, and astronomical bills due to incorrect loan lengths caused by billing errors.

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Addressing the Aftermath: Navigating Consequences and Solutions for Student Loan Billing Errors

These billing errors have, in turn, led to delinquencies, missed payment credit towards forgiveness programs, incorrect interest charges, and bank fees due to overdrawn accounts as a direct consequence of the billing errors. The Department of Education has already taken action against MOHELA, withholding a $7.2 million payment for October, and has directed services to offer refunds for bank fees and incorrect bills arising from the errors.

However, the process of refunding borrowers remains uncertain as servicers are grappling with the magnitude of addressing these errors. Borrowers affected by these billing errors can anticipate hearing from servicers with updated information in the near future to rectify the billing errors.

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