MILLIONS of Americans were left in a panic after crucial payment information and tracking had essentially disappeared regarding a key federal program.
As litigation over student loan payments continues, borrowers are being left in the dark on their repayment statuses.
Student borrowers are being left in the dark regarding key payment information[/caption]
American borrowers are confused over their payment tracking due to litigation over student loan payments[/caption]
Americans logging into their student loan servicer accounts may be unable to view their loan forgiveness payment progress following the Education Department’s move to halt payment counts.
Missouri Higher Education Loan Authority, or MOHELA – one of the biggest student loan servicers – temporarily removed the ability for student borrowers to monitor their loan forgiveness payment counts for income-driven repayment plans.
“Federal Student Aid has temporarily removed the forgiveness payment counts for income driven repayment,” began an automated message via MOHELA’s customer service phone line.
“Unfortunately, our representatives do not have any additional information related to your IDR forgiveness counts. Please continue to visit StudentAid.gov for updates.”
MOHELA manages over 7 million federal student loan accounts, per its 2024 financial statement, and is one of the student loan servicers that the Education Department contracts with to collect student loan payments.
The temporary pause in payment counts could be problematic for borrowers, experts have warned.
The MOHELA notice is causing “a lot of confusion and anxiety” for borrowers, Betsy Mayotte, president of the Institute of Student Loan Advisors, told CNN. “To say it’s unfortunate is an understatement.”
One of the consequences of the pause is that borrowers cannot find payment information, resulting in a state of “mass chaos and confusion,” Alyssa Dobson, director of financial aid and scholarships at Slippery Rock University, told the outlet.
“Right now, I know that my borrowers, who are now my alum now because they’re in repayment, can’t reliably find information on how many payments they’ve made towards public service forgiveness,” she said.
“The only place that they’ve been able to find this information is at StudentAid.gov, and that’s concerning to them because their loan servicer is their point of contact.”
DEBT DILEMMA
The temporary pause on student loan payment tracking comes as litigation is underway over former President Joe Biden’s SAVE student loan repayment plan.
The Biden administration previously introduced several more affordable payment plans for student borrowers in 2023, including the SAVE plan, which Republican state attorneys general challenged in court.
They argued the plans were overly charitable and unfairly forced taxpayers without a university education to contribute.
As a result, the Education Department was blocked from implementing Biden’s SAVE plan and parts of other income-driven repayment plans under a US Court of Appeals ruling in February.
Student Loan Statistics
- Student loan debt in the US is over $1.777 trillion
- Federal student loan debt accounts for 92.2%
- Average federal student loan debt amount per person is $38,375
- Students at a public university borrow $31,960 on average to attain a bachelor’s degree
Credit: Education Data Initiative
Students who log into their student loan servicer accounts will be met with a concerning banner, a Department of Education spokesperson told CNN.
“A federal court issued an injunction preventing the implementation of the Saving on a Valuable Education (SAVE) Plan and parts of other income-driven repayment (IDR) plans,” it reads.
“As a result, your IDR payment count and payment history are temporarily unavailable. Stay up-to-date on court actions affecting IDR plans: StudentAid.gov/courtactions.”
Mayotte said the pause on payment counts tracking was the result of the litigation that blocked the entire regulatory package SAVE was under.
“When the latest injunction blocked the whole package, that meant that the Department of Education could no longer count those periods of deferment and forbearance going forward from February,” she said.
“And so, because of that change, they had to take the counter down so they could either wait out the litigation or reprogram it to not reflect those particular deferments and forbearances from February forward.”
The move has been “very stressful” for students, and “the need for guidance and the incoming concerns are really growing,” she said.
Adhering to the injunction blocking Biden’s SAVE plan, the Department of Education also announced on Wednesday it will resume charging interest for millions of Americans under the plan in the wake of the pandemic-era pause.
The department is instructing federal student loan services to once again charge interest starting on August 1, the Education Department shared in a news release.
To comply with the judge’s order, it also removed applications for all income-driven repayment plans from its website.
The Trump administration is currently rolling out new policies regarding student loans, limiting borrowers to just two repayment options.
Plus, paychecks could be wiped out by 15% after nearly 6 million Americans are 90 days past due on loans.
