Justin Boggs
Biden's second stab at student loan cancellation moves forward
President Biden directed the Education Department to find another path to loan relief after his first plan was canceled by the Supreme Court.
LEARN MOREPosted: 2:14 p.m. EDT Oct 25, 2023
Nearly 305,000 federal student loan borrowers received an incorrect bill for October 2023 as payments resumed this month for the first time since March 2020.
According to a Department of Education spokesperson, the Missouri Higher Education Loan Authority (MOHELA) inadvertently used the 2022, instead of 2023, poverty guidelines tables to calculate payments when transitioning borrowers from the REPAYE to the SAVE Plan. The Department of Education said it notified impacted borrowers that their actual payments would be different than billed.
In most cases, the actual amount billed should have been lower, but in a few cases, the amount was higher.
"While we regret any error, the Department is working closely with student loan servicers to ensure that they are providing borrowers the information they need and holding servicers accountable when they do not," the Department of Education said. "When the Department identified these problems, we immediately directed servicers to notify affected borrowers and put them into administrative forbearance until their correct payment amount was calculated, so there would be as little impact as possible on borrowers. Because of the Department’s stringent oversight efforts and ability to quickly catch these errors, servicers are being held accountable and borrowers will not have payments due until these mistakes are fixed."
The government said student loan services were told to put affected borrowers into administrative forbearance until the correct payment amount is calculated.
The Department of Education said the glitch impacted about 1% of the 28 million borrowers resuming payments this month.
During the summer, the federal government launched a website for borrowers to begin applying for income-driven repayment plans. The White House has touted the new plans as a response to its failed attempt to forgive up to $20,000 in student loan debt among low and middle-income borrowers.
The newest income-driven repayment plan implemented by the Biden administration means most borrowers will have lower monthly payments than before the pandemic.
