- The new SAVE income-driven repayment plan was intended to make borrowers' monthly payments cheaper.
- But many borrowers have faced errors with the plan and their payments are higher than what they can afford.
When Ann Currie started to prepare to pay off her $60,000 student-loan balance after an over three-year pause, she wanted to be sure she could manage the monthly payment.
As a single mother helping to support her children and grandchildren while living on a rent subsidy, Currie said she knew she could only afford a small payment amount each month. So when she applied for President Joe Biden's new SAVE income-driven repayment plan, she was pleased to see a projected monthly payment of $47 — something she felt confident she could pay on top of her other financial obligations.
However, once she received her first bill last month with a payment of $175 due, according to documents reviewed by Insider, she knew something was wrong.
"They're requiring me to pay something that I can't afford to pay on right now," said Currie, who requested to use a pseudonym to protect her privacy but whose identity is known to Insider. "I do want to pay something, but I'm not able to pay that amount that they're requiring me to pay."
As a call center worker, Currie said she only receives two 30-minute breaks each day, so when she tried to call her servicer and the hold time was an estimated 422 minutes, she was not able to stay on the line to get help.
When the Education Department officially rolled out the SAVE plan in August, it was coined as "the most affordable repayment plan yet." According to the department, borrowers who make under $15 an hour would have $0 payments under the new plan, and it would save other borrowers at least $1,000 a year compared to other income-driven repayment plans.
But, according to a Washington Post analysis, the plan has been hurting thousands of borrowers instead of helping — the Education Department estimated that 420,000 borrowers have faced errors with SAVE calculations. A spokesperson told Insider that the department is "working closely with student loan servicers to ensure that they are doing everything to provide borrowers the information they need when they need it and holding servicers accountable when they do not."
The spokesperson added that the department takes oversight over servicers "very seriously" and works to resolve issues as quickly as possible, also noting that borrowers will be offered refunds on any overpayments.
Currie did not make the $175 payment that was due on October 1, and she's worried the issue will not be resolved by the time her next payment is due in November. While the Education Department spokesperson said it instructed servicers to place all borrowers with errors on administrative forbearance, that has not yet happened for Currie, and she's not sure what else to do.
"I plan on making payments as much as I can," Currie said. "I want to be able to make the payments, it's just that the amount that they have said for me, I will be struggling if I made that payment."
'Nobody really knows anything'
Joanna Arbach, a 53-year-old student-loan borrower, is facing the same dilemma as Currie. When she applied for the SAVE plan, she was told her monthly payment would be $125 a month, but when she got her billing statement, she was facing a $428 payment, according to documents reviewed by Insider.
Her account is now marked as past-due because she was unable to afford that payment due on October 1, and she hasn't been able to reach customer service for a timeline on when her payment will be adjusted.
"I couldn't make those huge payments right now," Arbach said, noting she's spoken with about five different people at her servicer about the issue.
"The other ones kept telling me just wait, just wait, just wait," she continued. "I had to take time off work so they could call me back the next day. And they told me, 'well, it's still saying it's in processing on my end,' and nobody really knows anything."
The only other option Arbach said she has right now is to write to her state representative to see if they can step in, but the limbo is "very stressful financially" because she can't afford the payments her servicer says she owes.
While the Education Department has announced the 12-month "on-ramp" period to ease the transition back into repayment, during which it will not report missed payments to credit agencies, interest is still accruing during that time. The department also cannot control how credit scoring companies factor in missed payments, so the on-ramp does not entirely protect borrowers from the consequences of missing a payment.
Additionally, both the department and servicers have blamed lack of funding for Federal Student Aid as a main factor for the mistakes and delayed customer service — but that's not sufficient for borrowers who are being billed for payments they cannot afford.
"They've had a lot of time to get this all together, and I think a lot of us did call early," Arbach said. "But it's been a nightmare. I'm sure I'm not the only one that's gone through this nightmare."