Autopay errors are causing problems for borrowers of federal student loans. These errors, which include unauthorized withdrawals, incorrect charges, and multiple deductions in the same month, can have serious financial consequences for borrowers.
For example, one borrower who was supposed to have a $0 monthly payment was unexpectedly charged $2,074, raising concerns about their ability to meet other financial obligations. Another borrower reported that their servicer withdrew $6,897 when they only owed $1,048. These errors can make it difficult for borrowers to cover essential living expenses.
Despite the risks, some experts still recommend autopay enrollment for the benefits it offers, such as interest rate discounts and reduced chances of late payments. However, for borrowers on tight budgets, the risks may outweigh the benefits.
To mitigate the potential for overcharging, experts suggest setting up bank alerts for transactions above a certain threshold. If borrowers encounter incorrect autopay deductions, they should contact their loan servicer immediately to demand a refund and address any associated fees. They should also consider reaching out to their financial institution within ten business days of the erroneous charge.
If issues persist, filing a complaint with the Education Department"s feedback system or contacting the Federal Student Aid Ombudsman can provide additional avenues for resolution. It is important for borrowers to stay informed and proactive in managing their student loan accounts.