Her student loan bill was supposed to be $0. Then $2,074 was taken from her account

Morgan Lindsay didn’t mind that student loan bills were resuming in the fall. She’d applied for a new repayment plan over the summer, and her calculated monthly bill came to $0.

But then, on Sept. 11, she found that her servicer, Mohela, or the Missouri Higher Education Loan Authority, had taken $2,074 from her bank account.

“I blamed my husband at first,” said Lindsay, who asked for her last name to be withheld for privacy reasons. “I said, ‘Why did you pay so much to my student loans?'”

When she realized the mistake had been her servicer’s, she panicked.

“I lost sleep over it,” Lindsay said. “That’s our nest egg, and if there was an emergency, it was gone.”

When she called Mohela, she was on the phone for an hour before she got someone on the phone. She learned that the company had billed her as if she were on the Standard Plan, which divides a borrower’s debt evenly over 10 years of payments. Her total student debt balance is over $170,000, and like for many other people, that plan is unaffordable for her.

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But under the income-driven repayment plan she’d signed up for, she didn’t owe anything. Those plans base a borrower’s monthly bill on their discretionary income, and Lindsay works in the public sector.

The customer service representative at Mohela promised her a full refund within seven to nine business days.

Still, she felt on edge.

“They weren’t sending me anything in writing,” she said. “What if I got an overdraft fee? What if I couldn’t pay my mortgage?”

Mohela did not immediately respond to CNBC’s request for comment.

Similar to Lindsay, many student loan borrowers describe a nightmarish experience with the return to repayment.

The Biden administration resumed the bills for some 40 million Americans last month, after they’d been on pause for more than three years. The U.S. Department of Education has already withheld a large payment to Mohela for October for failing to send timely bills to some 2.5 million people — more than 800,000 of those borrowers became delinquent on their loans as a result. A memo obtained by the Washington Post shows that some student loan borrowers have received inaccurate bills for more than $10,000 a month — and some, $100,000.

Such mistakes can be especially painful for borrowers who’ve signed up to have their monthly bills automatically deducted from their account each month. Borrowers get a small discount on their interest rate for doing so, but getting a refund was a trying ordeal for Lindsay.

When two weeks passed and she still hadn’t been refunded, she called Mohela back. This time, she was on the phone for nearly three hours.

Finally, she got a supervisor on the phone — but they had bad news for her.

Her first request for a refund had, for some reason, been canceled, and she was told it could take up to 90 days to get her money back.

At that point, she emailed senior leadership at Mohela, including the company’s CEO, Scott Giles.

Not long after, she heard from a customer service representative with the servicer. Her refund request was expedited, and she got her money back in mid-October.

“It still took a month,” Lindsay said.

Borrowers enrolled in autopay should watch their account “like a hawk,” said higher education expert Mark Kantrowitz.

If you’ve been billed for the wrong amount, you should immediately contact your loan servicer, Kantrowitz said.

Borrowers should demand an “immediate refund,” Kantrowitz said. They should also ask their servicer to cover any late fees from bounced checks or an overdraft.

“Put the demands in writing,” Kantrowitz said.

Borrowers probably shouldn’t opt out of autopay given the interest rate discount, he said. It’s more important that they get their servicer to bill them accurately.

If you run into a wall with your servicer, you can file a complaint with the Education Department’s feedback system at Studentaid.gov/feedback.

Problems can also be reported to the Federal Student Aid’s Ombudsman, Kantrowitz said.

Although Lindsay got her money back, she said the debacle will continue to cost her. Even though it leads to a lower interest rate, she’s no longer comfortable being enrolled in automatic payments.

“How can I trust anyone moving forward with access to my checking account?” she said.

Has your student loan servicer automatically charged you an incorrect amount? If you’re willing to talk about your experience for a story, please email [email protected].

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