The problem comes as borrowers are already dealing with major changes to federal repayment programs, including the phaseout of the SAVE plan and the introduction of new repayment options. The incorrect figures have created uncertainty for borrowers trying to determine their monthly obligations and repayment choices.
A Calculation Error Affected Borrowers Who Updated Family Size Information
According to the Department of Education, the affected borrowers were those who manually updated their family size information during the IDR application process. Federal Student Aid (FSA) was unable to use existing tax information to correctly recalculate their payment amounts, which led to incorrect figures being issued.
Borrowers received emails from Federal Student Aid stating: “Due to an error, you received an incorrect monthly payment amount.” The notices instructed them to submit a new application in order to receive an updated calculation and enroll in the appropriate repayment plan.
Ellen Keast, the department’s press secretary for higher education, said that FSA had addressed the issue and that most affected borrowers were able to see updated monthly payment amounts within days of the problem being identified, according to Newsweek.
The department said some borrowers may see payment amounts that differ significantly from what they expected. Kevin Thompson, CEO of 9i Capital Group, told Newsweek that some borrowers were facing higher monthly payments than they had anticipated.
The latest issue follows another payment-related error reported in June, when some borrowers who shared federal tax information with Federal Student Aid were mistakenly shown monthly payments of $50. In that case, the department said the issue had been corrected and that many borrowers would not need to submit new applications.
Repayment Changes Add Confusion for Borrowers Seeking Accurate Information
The calculation error arrives during a period of major changes to the federal student loan system. The Trump administration’s repayment changes took effect on July 1, including the launch of the new Repayment Assistance Plan (RAP), which borrowers have been encouraged to consider.
Meanwhile, millions of borrowers enrolled in the SAVE plan have been notified that they need to transition to another repayment plan within a specified timeframe or they may be automatically moved to an alternative option.
According to Business Insider, borrowers have expressed frustration over difficulties obtaining accurate payment information while trying to choose repayment plans that fit their financial situations. Robin Binkley, a borrower quoted by Business insider, said selecting the right plan could affect her finances for many years and questioned why borrowers were expected to make decisions without reliable information.
Other reported issues have included incorrect payment estimates on the online IDR application, missing repayment options, and problems involving calculations for borrowers with spouses who have federal student loans, according to Forbes.
The Department of Education has advised affected borrowers to reapply through the federal student aid system to receive correct payment calculations. Financial experts have also recommended that borrowers check their accounts directly through StudentAid.gov, document communications, and review their repayment status carefully before making changes.
