8 Tips for Reviewing and Fixing Student Loan Payment Errors Amid Widespread Servicing Problems

The first month of repayment following the end of the student loan pause has been a bit of a mess.

Hundreds of thousands of borrowers have had their student loan payments miscalculated by their loan servicers, according to reports from The Washington Post and The New York Times. And this week, the Education Department revealed that MOHELA, one of the Department’s major student loan servicers, sent 2.5 million borrowers untimely billing statements, resulting in at least 800,000 borrowers being delinquent. The Department is withholding a $7.2 million payment to MOHELA as a result.

“Our oversight efforts have uncovered errors from loan servicers that will not be tolerated,” said U.S. Education Secretary Miguel Cardona in a statement on Monday. “We took immediate actions to protect borrowers from the fallout of this error and hold the responsible servicers accountable, including by withholding $7.2 million in payment from one servicer. The actions we've taken send a strong message to all student loan servicers that we will not allow borrowers to suffer the consequences of gross servicing failures.”

As the Biden Administration uncovers more loan servicing and student loan payment calculation errors, here’s what borrowers can do.

Confirm your student loan repayment plan

First, it’s important to verify which student loan repayment plan you’re on. If you’re on a Standard, Level, Extended, or Graduated plan, your payments would be based on a standardized amortization schedule based on your loan balance, interest rate, and repayment term – not your financial circumstances. In contrast, under Income-Driven Repayment (IDR) plans, payments are based on the borrower’s income. 

You can verify your current student loan plan by logging into your loan servicer account or your Department of Education account at StudentAid.gov.

Verify income basis for student loan payments under IDR

Borrowers who were on an IDR plan when the Covid forbearance first went into effect in March 2020 should revert to the monthly payments that were in place at that time, even if your income has changed in the interim. However, borrowers who recertified their income during the student loan pause, changed IDR plans, or consolidated their loans may have a different payment now based on updated income information. It might be useful to determine what income data your current monthly payment is tied to.

Borrowers who were previously in the Revised Pay As You Earn (REPAYE) plan are being automatically enrolled in the new Saving on a Valuable Education (SAVE) plan. SAVE is designed to be more affordable than other IDR plans, including REPAYE. So borrowers who were previously in REPAYE should see a reduction in their student loan payments upon automatic enrollment in SAVE. If your payment has increased under SAVE relative to what your payments were under REPAYE, however, and you did not update your income information reflecting higher income, that could be a sign that there was a payment calculation error. 

Use student loan calculators to verify payments

If you’re not sure if your monthly payment has been accurately calculated, particularly if you are on an IDR plan, you can try to verify what your payment should be by using a student loan calculator. Borrowers can use the Department of Education’s Loan Simulator, or Student Loan Planner’s student loan calculators. 

It’s important to have your Adjusted Gross Income (AGI) figure from the federal tax return that was used to calculate your current IDR payment so that you can get a more accurate monthly payment estimate. Remember – the AGI figure that was the basis of your current payment amount may have been from a tax return filed several years ago. 

Contact loan servicer if there is a problem with your student loan payment

If you believe your student loan payment has been miscalculated, you can contact your loan servicer and ask them to correct the error. However, borrowers have been reporting very long call hold times; in some cases, borrowers have had to wait on hold for hours without ever being able to reach an agent. 

You may have more success if you call first thing in the morning, as soon as the servicer’s call center opens. Check the loan servicer’s website for call center hours, and plan accordingly. 

Take advantage of student loan on-ramp

The Biden Administration has rolled out a 12-month student loan “on-ramp” period to make the transition back to repayment easier for borrowers. During that time, missed payments won’t result in federal student loan borrowers being delinquent or falling into default, according to the Education Department. Instead, a missed payment will be retroactively converted to a forbearance. This will protect borrowers from most adverse consequences associated with missing student loan payments – although those months may not count toward student loan forgiveness under IDR and PSLF.

Borrowers who have experienced a student loan payment calculation error, or who otherwise cannot afford their payments, can take advantage of the on-ramp and skip a payment while they sort out the issue. This may not be ideal, however, particularly given the pause in student loan forgiveness progress when a payment is missed.

Reapply for IDR online

If your student loan payment under IDR has been miscalculated, one potential workaround is to reapply for IDR online through the Department of Education’s website. This should trigger a review by the loan servicer, and it may be faster than trying to get the loan servicer to correct the error via a phone call.

However, borrowers should be cognizant of the income basis for a new IDR application. If your income has increased since your last IDR application, or if your financial circumstances have otherwise changed significantly (for example, if you got married), you may inadvertently cause your student loan payments to increase through a new IDR application. So, this route may not be a good idea for everyone. 

Apply to switch to SAVE plan

Only borrowers who were on the REPAYE plan before will be automatically enrolled in the new, more affordable SAVE plan. Borrowers in other IDR plans, such as IBR and PAYE, must affirmatively apply to switch to SAVE if they want to enroll in that plan.

Switching to SAVE could be a way to lower your monthly payments, since SAVE is designed to be the most affordable IDR option. And applying online for SAVE may reduce the chances of experiencing a student loan payment recalculation error. However, again, borrowers should be cognizant that if your income has increased since the last time you certified your income for an IDR plan, this may result in a higher student loan payment, even though SAVE is more affordable. 

Furthermore, while switching to SAVE at some point will probably make sense for most borrowers, there may be some reasons to remain in a plan like IBR or PAYE, such as the Partial Financial Hardship-based “ceilings” or caps on monthly payments, or PAYE’s shorter 20-year repayment term for graduate student loan borrowers. Importantly, borrowers who switch from other IDR plans to SAVE may not be able to switch back after July 1, 2024. 

File complaint with Education Department if student loan payment issue not resolved

If your student loan payments have been miscalculated and you cannot resolve the issue with your loan servicer or by switching IDR plans or reapplying, borrowers can file a complaint directly with the U.S. Department of Education. This can be done via the Federal Student Aid Feedback and Complaint system, or the FSA Ombudsman Group.