New Report from Van Hollen, Warren, Blumenthal, Markey Reveals Over 3.9 Million Student Loan Servicer Billing Errors During Return to Repayment

Report – Servicing Scandals: Student Loan Servicers’ Failures During Return to Repayment

Today, U.S. Senators Chris Van Hollen (D-Md.), Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), and Edward J. Markey (D-Mass.) released a new report: Servicing Scandals: Student Loan Servicers’ Failures During Return to Repayment, which reveals a decades-long pattern of student loan servicer incompetence and misconduct that has affected millions of borrowers nationwide. The report examines servicer failures during the return to repayment and how these countless billing errors and customer service problems harmed borrowers. The report comes as the Senate Banking, Housing, and Urban Affairs Committee’s Subcommittee on Economic Policy holds a hearing today on MOHELA’s performance as a student loan servicer.

The report includes new information about loan servicers' performance during the return to repayment provided by the Department of Education and from loan servicers' responses to Congressional inquiries.  This data indicated that, in total, servicers made more than 3.9 million billing-related errors during the return to repayment.

“Millions of Americans struggle under the weight of student debt, hindering their opportunities and holding back our entire economy. And as this report shows, systemic incompetence and mismanagement across the student loan servicing industry spanning many years – as well as the millions of billing errors that have occurred since the return to repayment after the pandemic pause – have only made things harder for these Americans. The Biden Administration has made critical improvements through their new industry accountability measures, but we must do more to help those who have been impacted by servicers’ failures and to ensure that their actions don’t hinder the Administration’s work to provide relief to millions of borrowers,” said Senator Van Hollen.

“It’s clear that all servicers misled borrowers and screwed up the resumption of student loan repayments, making a whopping 3.9 million errors,” said Senator Warren. “For decades, loan servicers misled and harmed borrowers who have done everything right. It’s time for real action and accountability.” 

“The findings of this report paint a harrowing picture, and borrowers deserve justice—these servicers must remedy these harms and resolve this nightmare for borrowers. Student loan debt in the United States is more than $1.6 trillion dollars, impacting over 42 million Americans. For too long, student loan servicers have harmed borrowers with deceitful tactics, including incorrect and late billing statements, low quality customer service, slow processing times, and an overall lack of transparency,” said Senator Blumenthal.

“Rampant student loan servicing errors have left millions of borrowers confused about how much they owe and when. These student loan servicers are further proving to the American people the absurdity of saddling students who are working to achieve their educational dreams with expensive and burdensome loans. We must work towards a world where students don’t have to worry about taking on any debt at all. In the meantime, the Biden administration needs to take steps to ameliorate the harm that these servicers have inflicted on borrowers,” said Senator Markey. 

The report found that every single student loan servicer—EdFinancial, Maximus, MOHELA, and Nelnet—failed to adequately prepare for the transition back to repayment despite numerous warnings and federal funds throughout the payment pause. As a result, millions of borrowers experienced billing-related errors and poor customer service, made unnecessary payments, and were denied debt relief due to servicing mistakes. 

The report calls for a clear path to cancel debt for borrowers who are harmed by servicer failures as the Department of Education works through the rulemaking process for student debt cancellation under the Higher Education Act. 

Key findings from the report include: 

• Student Loan Servicers Have a Decades-Long Pattern of Failures. The COVID-19 pandemic exacerbated and highlighted a decades-long problem: lack of accountability allowed student loan servicers’ abuses to go unchecked and caused harm for borrowers crushed by student loan debt. 
• Servicers Failed Borrowers During the Return to Repayment. After a three-year pause on student loan payments, collections, and interest due to the COVID-19 pandemic, borrowers were required to resume payments on their loans starting in October 2023. But servicers failed to adequately prepare. As a result, millions of borrowers experienced countless billing errors and customer service problems. In total, servicers made more than 3.9 million billing-related errors during the return to repayment. Data revealed high call wait and email response times, with one servicer reporting a six-week average email response time; call abandonment rates reaching as high as 48.2% during the return to repayment; and customer service ratings that repeatedly fell below ED’s required thresholds.
• The Biden-Harris Administration Responded to Servicer Failures and Strengthened the Student Loan Servicing System. The Biden-Harris Administration improved accountability metrics for servicers that prioritized the borrower’s customer service experience, provided temporary protections for borrowers during return to repayment—like requiring servicers to place borrowers affected by their errors into short administrative forbearance while they fix the problem—and held servicers accountable when they failed. While the Biden-Harris Administration has taken aggressive action to protect borrowers, it can do more by providing additional pathways to cancel student debt for victims of servicer error.