A major student loan company caused ‘confusion and anxiety’ by mistakenly telling some borrowers they had debt payments due in September

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At a time of extreme uncertainty for millions of federal student loan borrowers, a mistake by a major company may have made matters even more confusing.

In July, President Joe Biden’s Education Department directed student loan companies to suspend messaging to borrowers regarding the student loan repayment date, including anything related to monthly billing. It was the same action the department took ahead of Biden’s fourth extension of the student loan payment break, which is currently set to expire after Aug. 31, and sparked speculation that the break would be extended.

However, some borrowers received notice of payment as early as September 1, particularly those whose accounts were transferred from former servicer Navient to a new student loan company, Aidvantage, which is run by Maximus. According to exhibits provided to Insider by the advocacy group Student Borrower Protection Center (SBPC) and conversations with borrowers, some accounts show payments due in September ranging from $1 to hundreds of dollars.

Chris Hicks, senior policy adviser at SBPC, told Insider that it is unclear how many borrowers have been asked to make a payment to Aidvantage when nothing is actually due. He said the monitoring was “causing borrowers extreme confusion and anxiety”.

“While there is some uncertainty as to whether the payment pause will be extended, ED has made it clear that borrowers will receive a statement at least 21 days prior to their payment due date,” Hicks said. “ED has also made it clear to its services not to contact borrowers until the payment pause extension regarding the resumption of payments, however, borrowers’ accounts show due dates within 21 days from today. today.”

“Whether or not this is an actionable misrepresentation under federal or state law, it is at the very least an indication that repairers, particularly Maximus, are exacerbating a already difficult situation and warrant further examination,” he added.

Maximus spokeswoman Eileen Cassidy Rivera told Insider that the federal student aid office “has asked Aidvantage to stop reimbursement communications during this interim period. Anyone who inadvertently receives notification reimbursement during this period has been identified, its accounts corrected and an apology sent”.

In December, when Navient received approval to terminate federal service, Rivera also Told Insider that it is “imperative” that the company facilitates a smooth transition to reimbursement.

A spokesperson for the Department of Education told Insider that “all communications from service agents to federal student loan borrowers regarding the restart of student loan payments were sent in error. The Department of Education has directed service officers to notify federal student loan borrowers who received the message that payments remain suspended.”

The spokesperson also noted that less than 0.1% of borrowers received the notice and no payment was received.

Insider spoke to a Connecticut borrower whose account was transferred from Navient to Aidvantage, and they now have a balance of $268.24 due on September 8. They said they had not received an apology and their account still shows payment due in a few weeks.

“It’s very stressful and I just feel like it puts a lot of strain on the borrower to find a way to document everything and present it and make sure we’re able to support our own case one day. “said the borrower. “It’s so confusing. For example, am I going to owe Aidvantage $200 next week, or not?”

According to Hicks, the other affected borrowers have not received an apology and their accounts still show payments due in two weeks. Additionally, some of the borrowers saw that they had been signed up for direct debit without signing up for this feature, meaning they risked having money withdrawn from their accounts without their knowledge or consent. .

Scott Buchanan, executive director of the Student Loan Servicing Alliance, a group that represents federal loan officers, wrote in a letter Monday to Education Secretary Miguel Cardona that despite the department’s advice, “basic systems , call center scheduling and training still reflect the recovery that occurred on September 1.”

“As the September 1 recovery date approaches, these manual processes and temporary workarounds being used may begin to exhibit points of failure as more and more automated system transactions begin to be triggered, and there there could be incidents of miscommunication from the borrower that will result from the lack of guidance in sufficient time for any transaction,” he wrote.

Yet despite anticipating an extended payment break, Biden has yet to make an announcement at the end of August in just over a week. Education Secretary Miguel Cardona said borrowers will find out “within the next week or so,” and the president is also expected to announce a broad student loan forgiveness by then, which could happen as early as Wednesday.

Although Maximus acknowledged that payments due was a similar error to shares of a different companyNelnet, took last week alerting some borrowers that their payments would be debited automatically, this reflects the range of issues that can arise with loan company transfers, as well as the administrative burdens and errors that come with resuming payments after more than two years.

Until Biden makes a formal decision on extending the break and canceling student debt, Hicks said all borrowers should check their accounts and if they see a payment due next month, they should. contact them state student loans ombudsman and file a complaint. If they don’t have a mediator, they can also contact their state attorney general’s office or the Consumer Financial Protection Bureau.

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