U.S. student-loan servicers face borrower complaints over repayment overhaul support

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Student-loan repayment complaints

Highlights

Borrowers report persistent confusion, long wait times, and inconsistent guidance from servicers amid the July 1 federal student loan repayment overhaul rollout.
The Department of Education in October 2024 withholds $7.2 million from MOHELA and fines additional servicers for failures in borrower communications and timely billing.
Trump administration reduces oversight in early 2025, with the CFPB deprioritizing servicer supervision and the FSA halting call quality and billing accuracy reviews, heightening borrower uncertainty.

Repayment transition strains borrower support

As first reported by Business Insider, dozens of borrowers say the companies servicing their federal student loans are failing to provide clear answers as President Donald Trump's repayment overhaul rolls out. Borrowers describe extended wait times, dropped calls and inconsistent information as they try to understand monthly bills and available repayment plans.

Ellen Keast, the Education Department's higher education press secretary, says internal data show hold times and dropped-call rates remain consistent, and that the department stays focused on ensuring high-quality customer service. She adds that Federal Student Aid leadership regularly meets servicers to review customer satisfaction surveys and performance.

Robin Binkley, 38, says she files a complaint with Federal Student Aid after spending countless hours over recent months trying to understand her options through calls and online chats with her servicer. She says the lack of accurate guidance is especially significant because she is also budgeting for a separate loan tied to her daughter's education and wants to secure the most affordable repayment option.

Jason Marques, 39, says his servicer relationship feels like "a bunch of red tape" after he applies for an income-based repayment plan expected to keep monthly payments below $100, only to receive a first bill for $633. After contacting Nelnet, he says he is placed in temporary forbearance, but the $633 charge still appears due on his account while he manages other monthly expenses on a five-figure income.

Sarah Smith, 35, says a payment she makes to MOHELA does not appear on the servicer's website, and that when she calls to confirm processing, a representative tells her she is no longer a MOHELA client. She says the end of the Biden-era SAVE plan adds to the uncertainty because she still does not know what she will owe under a different repayment option.

Oversight cuts deepen financial uncertainty

Problems with federal student-loan servicers predate the current repayment changes, and oversight has weakened since the administration change. Under the Biden administration, the Education Department penalizes servicers for failing to meet contractual obligations such as giving borrowers accurate information; in October 2024, the department withholds $7.2 million from MOHELA for not sending timely billing statements, and later fines other federal servicers over similar issues.

Under the Trump administration, supervision is reduced. In April 2025, the Consumer Financial Protection Bureau directs staff in an internal memo to deprioritize oversight of student-loan servicers, while the Government Accountability Office says in a March report that the Federal Student Aid office stops assessing servicers' call quality and billing accuracy in February 2025 because of Education Department staffing cuts.

The GAO says four of the five federal servicers do not meet their obligations and face $850,000 in penalties before those staffing reductions. The July 1 repayment overhaul, which includes new borrowing caps and a transition of millions of borrowers into new repayment plans, adds operational pressure on servicers and contributes to billing confusion for households trying to budget for retirement, groceries and other core expenses.

Jessica Salmi, 38, says she no longer bothers calling her servicer after waiting nearly an hour on hold before the call disconnects. For affected borrowers, uncertainty over loan bills is not only an administrative problem but an obstacle to broader financial planning.

Our earlier coverage of Kentucky Higher Education Student Loan Corporation’s student-loan transactions noted that the collateral performance remained stable and credit enhancement increased after closing, supporting the strength of the deals. We also explained that low losses and steady delinquency trends were aided by federal FFELP guarantees covering most defaults, helping insulate securities even under stress scenarios.

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