The Biden administration cuts $2M for student loan servicers after a bungled return to repayment
The Biden administration is docking more than $2 million in payments to student loan servicers that failed to send billing statements on time after the end of a coronavirus pandemic payment freeze
WASHINGTON — The Biden administration is docking more than $2 million in payments to student loan servicers that failed to send billing statements on time after the end of a coronavirus pandemic payment freeze.
The Education Department said Friday it will withhold payments from Aidvantage, EdFinancial and Nelnet for failing to meet their contractual obligations. The servicers failed to send timely statements to more than 750,000 borrowers in the first month of repayment, the agency said.
Education Secretary Miguel Cardona said his agency will continue to pursue “aggressive oversight” and won’t give loan servicers “a free pass for poor performance.”
It’s the latest attempt to straighten out a process that has been marred by errors after student loan payments restarted in October. Tens of thousands of borrowers have received billing statements late or with incorrect amounts as servicers scrambled to jumpstart the process.
The department previously withheld $7.2 million from loan servicer MOHELA for failing to send statements on time to more than 2.5 million borrowers. The new action will take $2 million from Aidvantage, $161,000 from EdFinancial and $13,000 from Nelnet, based on the number of borrowers who faced errors.
Nelnet said in a statement that less than 0.04% of its borrowers had missing or late statements, including some who chose to move their due dates up “to better meet their situation.”
“While we are confident the number of borrowers with Nelnet-caused billing statement errors is less than the number released we do
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