I. Introduction

The Trump administration is forcing 7.5 million student loan borrowers out of the Saving on a Valuable Education (SAVE) plan while weakening oversight of the companies managing their accounts. The plan, which gave millions of borrowers access to affordable repayment options, was a lifeline for borrowers amid record defaults. By one estimation, around half of all SAVE borrowers will see their student loan payments increase by $500 as a result of the transition. This comes over a year after the Republican-controlled Congress passed legislation gutting opportunities for financial aid. Despite billing errors and widespread confusion among borrowers over the transition, the first deadlines to leave SAVE passed in late September. And though September 29 was the earliest deadline any borrower faced, each cutoff depends on when a particular notice arrived.

Ahead of the first deadline, more than a dozen state student loan ombudsmen called for a delay in mandatory transitions. The ombudsmen noted that major servicers have a record of miscalculating loan payments, putting an unfair financial burden on borrowers already struggling. They noted that this record of miscalculating payments is especially concerning given servicers’ records of poor correspondence and delays in processing applications. It would be mistaken to assume these billing errors result in borrowers being presented with only moderately higher payment figures. In June, many borrowers who filed income-driven repayment applications were wrongfully informed that their monthly payments would be just $50. The figures ended up being vastly higher, with one borrower receiving a notice from her servicer that the actual figure was $2,200. An estimated 6,000 borrowers received these erroneous $50 payment notices.

Despite the easily foreseeable chaos of the transition, the Department of Education (ED) proceeded anyway. For borrowers who miss their 90-day window, they will be subject to placement in plans that are often significantly more expensive and do not factor income in monthly payments. The transition comes amid a broader Trump administration retreat from corporate oversight, including ED's rollback of programs designed to oversee servicer abuses. In a difficult labor market, especially for young people, it is alarming that the ED is willing to inflict further financial harm on student borrowers.

II. The Costs of a Servicer’s Error

DEADLINE CONFUSION FOR BORROWERS

In March, a federal appeals court cleared the way for a settlement between the ED and the state of Missouri that ended SAVE. Millions of borrowers were already financially struggling with student loan payments, even with SAVE providing options for more affordable plans. Some 400,000 borrowers fell into default on their federal student loans as of June 2026 per recently-released ED data. Beyond this figure, an estimated 3.5 million borrowers in active repayment were more than 30 days delinquent on their payments; this figure includes 1.5 million in late-stage delinquency, who face risk of default within the next six months.

For many of these borrowers, being automatically placed without their knowledge in a plan with far higher monthly payments poses financial devastation. Navigating the student loan process and the cost of higher education has long been a confusing endeavor for most students. The fact that these 90 day notices sent to student borrowers did not even list a calendar date will compound this confusion further, and put many struggling borrowers into either a Standard or Tiered Standard plan without their knowledge. In September, 89 advocacy groups wrote to Congress to express alarm over the impact of the transition on everyday borrowers. They estimate that a typical SAVE borrower could be forced to pay over $4,000 more per year under the new Repayment Assistance Plan. These costs will further burden borrowers whose balances have grown since August 2025, the month in which SAVE loans began accruing interest.

A report from Protect Borrowers and Princeton University's Debt Collection Lab finds that the companies managing federal loans have received more than $10 billion, and that a single account can pass through as many as a dozen servicers and collection agencies over the life of a loan. Bonnie Latreille, a senior fellow at the lab and former ED student loan ombudsman, described the burden this places on borrowers: "Every time a borrower's loan changes hands, it's a chance for something to go wrong. Unfortunately, the U.S. Department of Education forces the burden of catching those errors onto borrowers, rather than onto the companies it pays billions of dollars to manage these loans."

SHRINKING AVENUES FOR SERVICER ACCOUNTABILITY

The same coalition letter highlighted how many borrowers in August received incorrect past-due and default warnings. These erroneous notices were received by borrowers still enrolled in the SAVE forbearance period, when no payment was owed. For borrowers who were given wrong payment figures by a servicer, they have to keep paying even as they try to dispute it in the meantime. In the same period, borrowers saw their Public Service Loan Forgiveness credit disappear. The ED claimed that the disappearance was the result of coding errors without providing further elaboration. Constant miscommunication has only muddied the waters further for borrowers confused about the transition. In late July, the ED told some applicants for income-driven repayment plans that their payment amounts were wrong "due to an error" and that a second application was necessary.

The fact that some servicers’ accounts continued to display a SAVE forbearance period that ran through 2028 made it even more confusing for borrowers. Specifically, some borrowers noticed that on Edfinancial or Nelnet’s web portal displayed SAVE forbearance “showed November 2025, then jumped to November 2028, with no notice in between.” In reality, the actual deadline was after the 90 day period of first receiving the notice, itself confusing to many borrowers. These errors make the administration’s efforts to weaken avenues for borrowers to challenge servicer errors especially egregious.

A report by GAO found that ED stopped assessing servicers on accuracy and call quality in February 2025, citing a lack of staff capacity. Under Secretary McMahon, Federal Student Aid's staff fell from 1,433 to 777 over the course of 2025. As of December 2025 the office had adopted no replacement method and had not changed its performance standards. Cuts to the FSA’s Ombudsman Group undermine the ED’s ability to identify servicer wrongdoings. In conjunction with the Trump administration’s efforts to gut the Consumer Financial Protection Bureau (CFPB), which plays a major role in curbing servicer misconduct, borrowers’ ability to get justice is increasingly limited. As we noted in earlier analysis ahead of the September deadline, this retreat from contractor oversight mirrors the Trump administration’s general undermining of consumer protection efforts across agencies.

III. Conclusion

At a time when the student loan crisis remains as acute as ever, borrowers should not have to be burdened with correcting servicers’ own errors on top of skyrocketing payments. No loan repayment system should rely on borrowers to identify billing errors made by a servicer. While major servicers continue to evade accountability for miscalculating payments and failing to communicate with borrowers about major transitions, borrowers themselves do not have this luxury. Erroneous placements in more expensive payment plans can destroy one’s personal finances and credit. As part of needed reforms to curb the rising cost of higher education and give borrowers relief, the next Democratic administration must restore the ED’s accuracy and call-quality reviews that were abandoned in February 2025.