Miscalculating student loan payments could be costing borrowers millions of dollars. It’s a frustrating and confusing experience that is putting borrowers in a troubling position as they try to navigate the maze of loan servicers and payment plans.
Hundreds of thousands of borrowers are being asked to make inaccurate payments, a challenge that hits the most vulnerable borrowers hard, including those enrolled in one of the four Income-Driven Repayment Plans.
So far The Education Department estimates that 420,000 borrowers have been affected by miscalculations, though the actual numbers could potentially run into the millions. These are borrowers who had their monthly student loan payments set at an amount that is intended to be affordable based on their income and family size. Yet, administrative errors are being blamed for driving up these borrowers' payments, some at an unsustainable amount of hundreds of dollars per month higher.
Loan servicers are pointing to a series of errors behind the problem. They’ve blamed the issues on the transition from older, income-driven plans to the Administration's new SAVE Plan. As servicers began switching people over, some loan servicers were basing the payment on the old repayment calculation that uses the 150% poverty level line instead of the updated 225% guideline for the new SAVE plan.
Borrowers in other income-driven plans have also received incorrect monthly payment information due to reports of bad or missing information. The result: mass confusion and more financial stress for borrowers.
At Chipper, we recognize the challenges borrowers face in finding accurate payment information about their loans. We are committed to ensuring our users are enrolled in the appropriate plans with accurate payments. Chipper has several safeguards in place to protect our members if their servicer makes any miscalculation.
First, if our users are put into the wrong payment plan or asked to pay the wrong amount, we will proactively contact the loan servicer on their behalf to get the situation resolved quickly and effectively.
Second, we’ve built several calculators to help borrowers find out how much they are required to pay, how they could potentially lower their payments, and how much they could have forgiven on their student loans. Transparency is of the utmost importance to us and enables our users to budget, plan and explore the best repayment option for them.
Third, our app uses advanced technology to seamlessly connect student loans and automate enrollments into lower payment plans. That saves borrowers time and money, and gives them a clearer path to financial freedom.
Don’t overpay your student loans or get stuck with no options. We are here to help. Four out of five (82%) Chipper users find a better repayment plan through our app, and we hope you are one of them.