RESOLVING THE LEDGER
This is one outlet's own report from Newsweek — the article as it was filed. Other outlets are covering the same event; open the full story to compare every source side by side.
See the full story · 1 sources
0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. Thousands of federal student loan borrowers are being told to reapply for income-driven repayment (IDR) plans after a calculation error resulted in incorrect monthly payment amounts being issued by the federal student aid system.
The Department of Education said the issue has affected roughly 6,000 borrowers. All impacted borrowers have received emails from Federal Student Aid (FSA) informing them that they have been given an inaccurate repayment amount and will need to submit a new application to receive a correct calculation.
"FSA addressed this issue and most of the borrowers impacted were able to see updated monthly payment amounts within days of this coming to our attention," Ellen Keast, the department's press secretary for higher education, said.
The error comes at a particularly sensitive time for millions of student loan borrowers as the federal government implements a major overhaul of repayment programs.
Borrowers are already navigating the phaseout of the SAVE plan, the launch of new repayment options, and broader changes to income-driven repayment systems at the Department of Education.
Inaccurate payment calculations can make it difficult to budget and could also temporarily disrupt progress toward long-term student loan forgiveness programs that depend on remaining enrolled in qualifying repayment plans.
The Department of Education has confirmed that approximately 6,000 borrowers received emails instructing them to resubmit their income-driven repayment applications after a processing error generated incorrect monthly payment amounts.
According to the department, the affected borrowers were those who manually updated their family size information. Federal Student Aid was unable to use existing tax information to properly recalculate those borrowers' payments, resulting in inaccurate figures.
“For some borrowers, the recalculated payment amount is significantly different than expected,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek . “In many cases, they are now facing higher monthly payments than they anticipated.”
The email sent to borrowers stated: "Due to an error, you received an incorrect monthly payment amount."
A separate issue was reported in June involving borrowers who shared federal tax information with Federal Student Aid and were mistakenly shown monthly payments of $50. At the time, the department said the issue had been corrected and many affected borrowers would not need to submit a new application.
This time, however, some borrowers are being told that a new application is required in order to receive an accurate payment calculation and enroll in their desired repayment plan.
“The biggest concern is that borrowers are being forced to make important financial decisions quickly while dealing with inaccurate information, glitchy websites, and an overwhelming amount of program changes,” Thompson said.
“This is not a decision that should be rushed. The repayment plan you choose today can have long-term consequences for your monthly cash flow, total interest paid, and even your eligibility for future loan forgiveness.”
The repayment error arrives as the Trump administration continues rolling out the sweeping student loan reforms that took effect July 1.
Borrowers have been encouraged to explore the newly created Repayment Assistance Plan (RAP), which became available this month as part of the administration's overhaul of the federal student loan repayment system.
At the same time, millions of borrowers enrolled in the SAVE plan have been notified that they must transition to another repayment option within a limited timeframe or face automatic enrollment into alternative plans.
“The effects are larger than the number of borrowers involved because the student-loan system is already undergoing major repayment changes, and every billing error makes it harder for families to budget and avoid delinquency,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek .
With all the changes taking place, processing issues, application backlogs, and updated program rules are creating confusion for borrowers trying to determine how much they owe each month.
“The first move isn't reapplying. It's logging into StudentAid.gov directly, not through the email, and confirming whether anything is actually pending,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek .
“Who this hits hardest is predictable. Households whose size just changed. Lower earners. Anyone counting PSLF payments. People who built a real budget around a number the federal government handed them.”
Affected borrowers should reapply through the federal student aid system to receive correct payment calculations. They will then be able to enroll in the appropriate income-driven repayment plan.
Contact Newsweek editors on this story: Jason Lemon and Gray R. Thomas
AIPROPX is an independent multi-source news index — we track, compare, and connect coverage from across the web into one place you won't find anywhere else.