Student-loan borrowers who have faced repayment errors should get a ‘personalized’ explanation on how their account is being corrected — but it’ll take time, the Education Department says

Student-loan borrowers who have faced repayment errors should get a ‘personalized’ explanation on how their account is being corrected — but it’ll take time, the Education Department says
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Student-loan borrowers who have faced repayment errors should get a ‘personalized’ explanation on how their account is being corrected — but it’ll take time, the Education Department says
  • The Education Department said student-loan borrowers should receive “personalized” notices about account errors.
  • It could take weeks for borrowers to get that notice, but they don’t need to take any action.
  • Since federal student-loan payments resumed, borrowers have faced a range of repayment issues. 

Student-loan borrowers have encountered a range of repayment issues, and any mistakes in their accounts will be fixed — but it’ll take some time.

The Education Department posted guidance for borrowers on what to expect if they found mistakes in their accounts. Since federal student-loan payments resumed in October, the transition of millions of borrowers back into repayment strained servicers and led to errors such as a failure to send on-time billing statements and providing incorrect payment amounts on borrowers’ bills.

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As part of its oversight actions over servicers, the department instructed servicers in the fall to place all impacted borrowers on administrative forbearance — during which interest will not accrue — until the issues are resolved.

The guidance stated that borrowers can expect to receive, if they haven’t already, a “personalized communication from their loan servicer outlining what steps the servicer is taking to correct any issue(s).”

The notice should inform borrowers that their account is on forbearance, any interest accrued during that period will be removed, they will receive credit toward Public Service Loan Forgiveness and income-driven repayment plans, and they can request a refund on payments made during the forbearance period.

“It might take several weeks for your loan servicer to send this communication and to make corrections to your account,” the guidance said. “You might receive an updated billing statement before you receive the above communication about corrections. You do not need to take any action—just watch for the updated billing statement and correction communication.”

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As Business Insider previously reported, many borrowers were surprised to find their accounts on forbearance without receiving any form of communication from their servicer as to why that was happening. According to a notice reviewed by BI in November, student-loan company MOHELA told some borrowers that it was “in the process of updating your account. You will not be due for payment until after December 28, 2023, and your interest rate will be 0% through December 28, 2023.”

Still, that notice did not provide an explanation of the specific errors the company would be fixing. A Federal Student Aid memo released in October, however, offered additional details on some mistakes servicers were tasked to fix, like being improperly removed from forbearance or miscalculation a borrower’s monthly payment.

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The Education Department has also withheld varying amounts of pay from all four major federal servicers over failure to send timely billing statements to borrowers, and it released an accountability framework to ensure servicers have oversight as they continue facilitating the repayment process.

Are you still encountering repayment issues? Share your story with this reporter at [email protected].

Read the original article on Business Insider

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