New student-loan repayment glitches are throwing borrowers' budgets into limbo
One student-loan borrower saw her credit score plunge nearly 200 points. Another thought her payments would be $50, and they ended up much higher.
Recent changes to student loan repayment have caused issues for borrowers, resulting in budgetary uncertainty. On August 1, Daniela Perez received three emails from her servicer MOHELA, indicating her account was overdue, late payments, and approaching default. Perez had always paid on time, but found herself in a quandary after receiving the notices.
She sought help online, where others shared similar experiences. This past-due notice chaos stems from President Trump's student loan repayment overhaul, which took effect on July 1. The overhaul brought new repayment plans and borrowing caps, leading to various glitches as servicers adjust. Perez reached out to MOHELA on Monday, but after multiple transfers, she was unable to speak with a debt resolution specialist.
Her account was eventually corrected and returned to forbearance status, but her credit score remained unaffected. The Department of Education is monitoring servicers and addressing errors as they occur, notifying borrowers of any reported mistakes. Nevertheless, borrowers like Perez and Rebecca Pasillas have faced credit score drops and confusion.
The lack of clear communication about repayment changes contributes to these issues, as noted in a Government Accountability Office report.
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