Over 300,000 people who took out student loans were given incorrect information on their repayment plans after debt payments resumed at the beginning of October.
The Education Department told CBS News on Thursday that the agency has directed student loan repayment servicers to alert affected borrowers and place them into administrative forbearance, a period during which federal student loan payments are automatically paused or suspended and interest rates are set to 0%.
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The wrong information was provided to fewer than 1% of the 28 million borrowers reentering repayment this month, the Education Department said. The department added that the payments will remain paused until the correct amount is calculated to minimize the impact on borrowers.
"Because of the Department's stringent oversight efforts and ability to quickly catch these errors, servicers are being held accountable and borrowers will not have payments due until these mistakes are fixed," the agency added.
Some of those affected include borrowers who are in the new income-driven repayment plan launched by the Biden administration.
Saving on a Valuable Education, or SAVE, offers the most generous terms and offers the smallest monthly payment for lower-income borrowers. About 5 million people are enrolled in the SAVE plan, according to the Biden administration. Monthly payments in this plan are reduced from 10% to 5% of their discretionary income, though the 5% rate does not go into effect until mid-2024.
Loans were paused during the pandemic but restarted on Oct. 1, with borrowers expected to be enrolled in the same repayment plan that they were in before the pandemic. However, those enrolled in the Revised Pay As Your Earn, or REPAYE Plan, were automatically switched to the SAVE plan.
Because of this, borrowers have reportedly been facing additional problems when repaying their loans for the first time in more than three years, including customer service problems with their new loan servicers.
"We've seen a lot of confusion and a lot of huge gaps from the servicers and the Department of Education," Braxton Brewington of the Debt Collective, an advocacy group for people with student debt, told CBS News. "People are getting billed the wrong amounts, so when they have the problems, they aren't able to reach their servicer."
In early October, 19 state attorneys generals wrote a letter to the Education Department raising alarm at the "serious and widespread loan servicing problems," stating that many borrowers are navigating new servicers that "have little to no experience with such volumes" of borrowers restarting repayment plans.
"Simultaneously, servicers appear to be struggling to operationalize some of the recent and necessary improvements that the Department made to the federal loan repayment system," the attorneys generals wrote.
Borrowers have the "on-ramp" that protects them if they miss a payment, are late, or send a partial payment. It is a one-year leniency program beginning on Oct. 1, 2023, and ending Sept. 30, 2024.
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The Education Department said it "instituted its on-ramp program to provide borrowers a smooth transition into repayment where they will not be harmed if they miss a payment."
The Washington Examiner reached out to the Education Department for comment.