Student-loan borrowers are facing new bills next month — but minor paperwork errors and lost payments are causing 'a lack of clarity about absolutely anything'

• The student-loan payment pause is over, and some borrowers are facing problems with repayment.
• Two borrowers told Insider they're struggling to get answers from their loan servicers.

When Heather Hunter called her student-loan company this summer to see what her monthly payment would be, she said she "almost had a heart attack."

"My payment went up to $815 a month," Hunter told Insider. "I can't afford that. I'll have to apply for second jobs."

Soon after, Hunter looked at her options to pay off her $78,000 balance on an income-driven repayment plan, and to her relief, her projected payment was $370, so she applied — but a week before interest began accruing again on her federal student loans, she received a notice that her application was rejected due to missing information about her spouse on her paperwork.

"We apologize but we are unable to grant your request," the notice, reviewed by Insider, said. "You remain responsible for making your monthly payments."

After more than three years, the pause on federal student-loan payments ended on Friday — interest started accruing again on September 1, and borrowers will face monthly bills again beginning in October. While the Education Department previously instructed student-loan companies to communicate to borrowers what their monthly payments will be at least 21 days before their first bill comes due, complications with paperwork and difficulties accessing accounts and payment histories have left some borrowers unable to plan for an extra monthly payment.

Sarah, another student-loan borrower who requested her last name be withheld for privacy, told Insider she's struggling to determine what her repayment outlook is. Right before the pandemic, Sarah said she lost her job and was put on an income-driven plan that gave her $0 payments, which she was grateful for. But during the pandemic, her $29,000 balance — reviewed by Insider — got transferred to a new student-loan servicer, and she's been unable to access her full payment history to determine when her loans will qualify for relief.

"I still lack the information that I need. There's a lack of clarity on absolutely anything," Sarah said. "I'm pretty maxed out with my rent having gone up three times each of the last three years. I already work two jobs. I work full time at an insurance company and then I do Uber Eats on the side almost 30 or 40 hours a week."

The challenges Hunter and Sarah are running into are examples of the hurdles borrowers have encountered as they attempt to get answers on repayment. Student-loan companies have received an influx of calls and emails, and one company, Nelnet, had to shut down its call center and website multiple times due to "technical difficulties."

While the Education Department previously told Insider that it is in frequent contact with servicers to ensure they are communicating effectively with borrowers, the delays in reaching customer-service representatives and getting repayment information are leaving borrowers in limbo as repayment creeps closer.

"I need to pay the loan off and I need to pay it back, and I understand that," Hunter said. "So I don't mind doing that. I just need affordable payments that I can make."

'I just don't know what I qualify for'

Issues when borrowers' accounts are transferred to new servicers are something consumer watchdogs have been keeping an eye on for years. The Consumer Financial Protection Bureau released a report last year focusing on the challenges that arose when borrowers' loans were transferred, and it said that servicers often had inaccurate information about borrowers' monthly payments following the transfer, payments toward loan-forgiveness programs were not properly tracked, and servicers were inadequately staffed to manage program changes.

Additionally, a separate June report from the CFPB found that 44% of student-loan borrowers in the bureau's sample — or 14 million people — had their loans transferred to a new company during the pandemic, which it said would "complicate" the transition back to repayments because borrowers needed to "create new logins with their new servicer, re-enroll in autopay, or update their payment information," the report said.

Sarah said that despite multiple attempts to get her full payment history from her previous loan servicer, she's been unsuccessful, and it's preventing her from financially planning because she does not know how many years of repayment she has left. "I just don't know what I qualify for," she said.

Still, there's a chance relief could come for borrowers who have been making payments on income-driven repayment plans. The Education Department announced a one-time account adjustment for borrowers on those plans, and it most recently announced that 804,000 borrowers qualified for $39 billion in relief because they had made the required 20 or 25 years of qualifying payments. The department will continue evaluating other accounts every two months to determine who else qualifies for a loan discharge.

But for borrowers like Hunter who are struggling to get answers from their servicer, it's unclear what improvements can be made. President Joe Biden requested that Congress increase funding for Federal Student Aid to help repayment function smoothly, but Republicans have already proposed a funding cut — so borrowers may continue facing challenges in getting the help they need to afford an extra monthly bill.

"We won't have a savings account anymore," Hunter said. "We were able to start building a little bit of a savings account when we didn't have the student-loan-debt payment, but that's about to change."