With payments on her $44,000 in federal student loan debt about to resume, Juniper decided to see what the new income-driven repayment (IDR) plan touted by the Biden administration was all about. She applied in September, and her Federal Student Aid account told her the most affordable repayment plan for her is in fact the Saving on a Valuable Education, or SAVE, option, under which she would owe $47 per month.
Fast-forward to October, though, when the first loan payment was due, and Juniper was quoted $138 per month on her loan servicer's website. In her account, she is enrolled in the PAYE program, another income-driven repayment (IDR) plan that isn't as generous, according to screen shots of her account reviewed by Fortune.
Juniper, who asked that her last name be withheld to protect her privacy, got laid off last November. When she found a new job, her income took a hit, falling from $28 per hour to $18.50. While the nearly $100-per-month difference in the payment amount may not seem like much to some, for her it's the difference between being able to save a little something for emergencies and retirement and nothing at all. She has no idea why the Federal Student Aid website shows her one thing and her servicer's account another.
"It's been a nightmare," the 31-year-old says, of trying to find answers to her enrollment issues. "I might not starve, but I certainly won’t be thriving. When we’re talking $1,200 a year, it’s significant. It’s that much more I can't plan if life throws me another curveball."
Juniper contacted her loan servicer, and has been placed in administrative forbearance until the end of October. She isn't the only one running into issues. At least 420,000 borrowers have had their SAVE payments miscalculated by their loan servicer in recent weeks, according to the U.S. Department of Education. But the total number could grow much higher, given that at least 4 million people have applied for SAVE and not all of the applications have been processed yet.
The errors—resulting in an untold number of hours on hold with servicers and countless frustrations—come as federal student loan payments resume for over 40 million borrowers after a 3.5 year hiatus. They appear to be primarily affecting those who tried to enroll in the SAVE plan, which was newly created by the Biden administration and much-hyped as a more affordable option for struggling borrowers.
The Education Department told Fortune it is working with servicers to rectify the problems. When the problems came to light, the Department says it immediately put affected borrowers into forbearance, where they will stay until the payment amount is corrected.
"Our top priority continues to be supporting borrowers as they successfully navigate return to repayment and making sure they have the resources, tools, and information they need to find the best repayment plans," an Education Department spokesperson said in a statement.
Borrowers will be offered a refund of any recent payments, the spokesperson added. Any time they spend in forbearance related to this error will count toward the total payments needed to qualify for loan forgiveness programs including under IDR and Public Service Loan Forgiveness.
The SAVE plan was announced by President Joe Biden in 2022, and will take full effect in 2024. That said, the Biden administration has been encouraging borrowers to enroll in it for the past few months. Federal student loan repayment plans are already confusing enough, Juniper says. The recent errors and miscommunications are making it doubly so.
For now, Juniper is waiting on her loan servicer to get back to her. She's frustrated that there didn't seem to be better planning or systems put in place ahead of payments resuming—servicers had enough time to figure things out, she says. So did the Department of Education.
"How could they not expect this influx, and not prepare better?" she says. "Goat rodeo is about the best way to describe this whole thing, short of something that involves a lot swear words. It’s a catastrophe."
