2.5 million student loan borrowers didn’t receive their bill on time. Do you still owe?
Less than a month after student loan payments resumed for the first time in over three years, the U.S. Department of Education has announced several servicer errors impacting borrowers.
The Higher Education Loan Authority of the State of Missouri (MOHELA), a federal loan servicer, failed to send timely billing statements to 2.5 million borrowers, officials said in an Oct. 30 news release. Some borrowers were notified “within only seven days of their payment date.”
The delay forced over 800,000 borrowers into delinquency on their loans, according to the department.
Until the issues are resolved, MOHELA will place all affected borrowers in forbearance, officials said. Any months in forbearance due to servicer errors will be credited toward forgiveness through Public Service Loan Forgiveness and Income Driven Repayment plans.
As a result of the mistake, the department said it is withholding $7.2 million in payments to MOHELA in October.
The department also identified other servicer errors that resulted in borrowers receiving incorrect payment amounts on their billing statements, the release said. Borrowers with pending Borrower Defense claims were also incorrectly put back into repayment as a result of these errors.
About 305,000 borrowers — or about 1% of the 28 million borrowers whose payments resumed on Oct. 1 — were impacted by these mistakes.
Borrowers affected by these errors will also be placed in forbearance until the issues are resolved, officials said. Months in forbearance as a result of these mistakes will also count as credit for Public Service Loan Forgiveness and Income Driven Repayment plans.
“The Department has directed servicers to place all affected borrowers into administrative forbearance until the problem is fixed,” Federal Student Aid chief operating officer Rich Cordray said in the release. “In the meantime, we will adjust to zero any interest that accrues and credit them with progress toward public service loan forgiveness and income-driven repayment.
This story was originally published October 30, 2023 at 11:37 AM with the headline "2.5 million student loan borrowers didn’t receive their bill on time. Do you still owe?."
