Student Loan Borrowers Face Incorrect Bills and Hours on Hold

The resumption of student loan payments has challenged borrowers in more ways than one.

As reported here, the return of loan payments following their COVID-fueled hiatus has placed added pressure on paycheck-to-paycheck consumers.

But as CNBC reported Friday (Oct. 13), borrowers have also described getting incorrect bills and spending hours trying to reach their servicers via phone. One borrower told the network the estimated wait time at her loan provider was more than nine hours.

“It’s a challenging environment,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a federal student loan servicers trade group. “Sometimes there are incredibly divergent call hold times from what we’d like to see.”

In August, the Biden administration introduced the Saving on a Valuable Education (SAVE) plan, which offers an income-driven repayment (IDR) model that calculates monthly payments based on a borrower’s income and family size, rather than their loan balance.

As PYMNTS wrote, the plan also provides loan forgiveness after a specified number of years, and slashes undergraduate loan payments in half, reducing the burden from 10% to 5% of discretionary income.

However, the CNBC report says many borrowers who’ve signed up for SAVE say they’ve gotten incorrect bills.

Higher education expert Mark Kantrowitz told the network that he’s heard from several borrowers who have encountered this issue, and estimates that “hundreds of thousands of borrowers may have been affected.”

Kantrowitz added that some student loan servicers seem to be using the 2022 poverty line to calculate borrowers’ payments rather of the current 2023 figure. He also said that miscommunication could be behind the errors, as a number of larger student loan servicers moved away from the industry during the pandemic.

“Whenever there is a change of loan servicer, there can be problems transferring borrower data,” Kantrowitz said.

These borrowers are facing troubles at a time when the percentage of consumers who live paycheck to paycheck remains durable, according to recent PYMNTS Intelligence.

“Consistently, an average of 60% of individuals in the United States see their monthly obligations eat up the monthly take-home pay,” PYMNTS wrote last month. “Per the latest data, the percentage has inched up to 62%. And in terms of absolute numbers, nearly 10 million more consumers joined the paycheck-to-paycheck rosters by the end of 2022 than had been counted when the series began in March 2020.”