Borrowers of federal student loans were sent into a panic Thursday after receiving an email stating that payments would resume and be automatically taken out of accounts.
It turns out that the message was “sent in error.”
The major student loan servicer that emailed borrowers in error is Nelnet. This message has added to widespread uncertainty about whether the more than two-year student loan forbearance period that began with the COVID-19 pandemic will actually end on August 31 as planned. Several people may have been misled into thinking that their bank accounts would be automatically debited by Nelnet on September 1 due to their federal student loans after receiving the erroneous alert.
According to the Department of Education, any servicer communications to federal student loan borrowers regarding resuming student loan payments were sent in error. “has directed servicers to inform federal student loan borrowers who received the message that payments remain paused,” the agency said.
Nelnet quickly followed up the initial email with a second message explaining their blunder and offering an apology.
No payment is due or will be taken from your account on September 1 as stated in the email. We will send you a reminder 21 days before your payment is due.
By the end of 2021, Nelnet had serviced at least 6.4 million federal student loans. (Nelnet manages a larger volume of borrowers’ accounts via Great Lakes, another servicing company it owns; however, the two entities are run independently of one another.) How many of those borrowers actually got the email from Nelnet is unknown. Money reached out to the company for comment, but they declined to provide one.
According to the Department of Education, less than 0.1% of all borrowers of federal student loans actually got the notification. Though the Department of Education claimed no payments were collected, this would still imply that at least tens of thousands of borrowers were given misleading information about their federal student loans.
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When do I need to resume making payments on my federal student loan?
Nelnet’s erroneous alerts have added to the stress and anxiety that borrowers of student loans are already feeling.
On August 31st, the government shutdown temporarily suspending payments on federal student loans is scheduled to end. Time is running out, and there have been no announcements about a new extension from either the Education Department or the White House.
In a statement to Money, the Department of Education said, “The Department of Education will continue to assess the impacts of the COVID-19 pandemic and the economy on student loan borrowers.” When a decision is reached, “we will communicate directly with borrowers.”
The silence from government officials so far is seen as a strong indicator that the Biden Administration will grant a seventh extension of student loan forbearance by experts. In some cases, such an announcement might be accompanied by a plan to waive existing student debt.
Robert Farrington, CEO of The College Investor, recently told Money that “the lack of borrower communication to date makes the payment pause extension highly likely.”
The only answer we have right now is to wait for word from the authorities, which is hardly satisfying. It’s expected to arrive soon. Vice President Joe Biden has said that “by the end of August” he will decide whether or not to grant pardons.
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