Student loan servicer pauses payment counts tracking in a move experts say could cause confusion
One of the largest student loan servicers began notifying borrowers that it is temporarily removing the ability to track loan forgiveness payment counts for income-driven repayment plans in a move that some experts say could cause confusion for borrowers.
'Federal Student Aid has temporarily removed the forgiveness payment counts for income driven repayment. Unfortunately, our representatives do not have any additional information related to your IDR forgiveness counts. Please continue to visit StudentAid.gov for updates,' an automated voice message said through the MOHELA (Missouri Higher Education Loan Authority) customer service phone line.
MOHELA manages more than 7 million federal student loan accounts, according to its 2024 financial disclosure and is one of several student loan servicers that the Department of Education contracts with to collect student loan payments from borrowers.
The temporary pause that could affect some of those millions of borrowers comes as litigation continues over former President Joe Biden's student loan repayment plan, which promised lower monthly payments and a faster path to loan forgiveness. It also comes as the Trump administration has sought to eliminate the Department of Education and roll back the previous administration's student loan forgiveness policies.
The Biden administration had introduced a series of more affordable payment plans including the the Saving on a Valuable Education (SAVE) plan in 2023, which allowed borrowers to cap their monthly student loan bills at 5% of their income, instead of the previous 10%. Republican state attorneys general sued, arguing the plans were too generous and footed by non-college-educated taxpayers.
The Education Department announced on Wednesday it will restart interest accrual for borrowers in the SAVE plan in compliance with an injunction blocking implementation of the plan. The department said in a news release that it was directing federal student loan services to resume charging interest on August 1, noting that interest would not be assessed retroactively.
Betsy Mayotte, president of the Institute of Student Loan Advisors, said the MOHELA notice is causing 'a lot of confusion and anxiety' for borrowers.
'To say it's unfortunate is an understatement, but it's the result of the litigation, the fact that certain Republican states thought that the prior administration had exceeded their authority by creating this SAVE plan, and the court seems, at least, so far, to agree,' Mayotte said.
Alyssa Dobson, director of financial aid and scholarships at Slippery Rock University in Pennsylvania, said one of the consequences of the pause is that students are unable to find payment information, calling it a state of 'mass chaos and confusion.'
'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.'
Students work with loan servicers to make payments to eventually have their loans forgiven, she said, adding that it's 'quite concerning' to not be able to get that information from them.
A Department of Education spokesperson told CNN that borrowers who log into their accounts will see a banner that reads: '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. 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.'
'Borrowers can still see their PSLF payment count when they're logged into their StudentAid.gov accounts. The PSLF payment counters were not impacted by the February injunction,' the spokesperson added.
PSLF refers to the Public Service Loan Forgiveness program, which cancels any remaining student debt after qualifying public-sector workers make 120 monthly payments.
A US Court of Appeals ruling in February blocked the agency from implementing Biden's SAVE plan and parts of other income-driven repayment plans. The Education Department removed applications for all income-driven repayment plans from its website, effectively locking out borrowers from adjusting their plans if they're unable to pay the standard rate in a move to comply with the judge's order.
Mayotte said the recent move to pause the payment counts tracking may be related to the SAVE litigation, which she said blocked the entire regulatory package that SAVE was under.
'When the latest injunction blocked the whole package, that meant that the Department of Ed 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.'
Dobson said the move is 'very stressful' for borrowers, and 'the need for guidance and the incoming concerns are really growing.'
'These students made decisions, life decisions, important decisions based on something that they believed would be there and would be traversable, would be usable. And you know, now they're feeling like maybe it won't be. And it's really impactful to their mental health,' she said.
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