Late last week, NPR released results of an investigation showing that servicers have failed to accurately track many student loan borrowers’ progress within income-driven repayment plans — keeping many borrowers from reaping benefits of the program.

These plans lower monthly federal student loan payments according to the borrower’s income and family size. Most plans will forgive the remaining loan amount after 20 or 25 years of payments, but NPR’s report reveals that servicers have regularly mismanaged these accounts, making the track to forgiveness much harder.

Some servicers haven’t tracked borrowers’ payment history

The shortcomings of income-driven repayment plans are well-documented. In 2021, a National Consumer Law Center (NCLC) report found that, at the time, approximately 2 million borrowers had been in repayment on their federal loans for more than 20 years, but that only 32 actually received forgiveness through IDR. The report indicated that servicers have regularly steered borrowers away from the plans or provided insufficient information.

Now, NPR’s report reveals that the problem goes beyond borrowers simply not knowing about the program. Among NPR’s findings:

  • Some servicers weren’t aware of borrowers’ IDR status and didn’t have a way to track payment progress — meaning that servicers often had to manually count payments, and usually only after borrowers requested an update on their progress.
  • Many servicers have not been counting some qualifying payment periods at all. Borrowers who earn below 150 percent of the federal poverty line may have $0 payments, which still count toward IDR progress — but NPR found that in many cases, these $0 payments are not “adequately tracked.”
  • When borrowers change loan servicers, errors are transferred and compounded. Records can reach the new loan servicer with mistakes or omissions regarding the borrower’s repayment history, which puts the borrower at risk if they’re trying to work toward loan forgiveness. This is especially true if more than one transfer occurs.

Finding a solution will be complex

Neglecting to fix the IDR process could cause big problems, says student loan expert Mark Kantrowitz. As more borrowers reach the end of their 20-year repayment period, more may have to contend with spotty recordkeeping that could prevent them from receiving the forgiveness promised.

Above all, Kantrowitz says that the process should truly be automated, as it was intended. “The payment counter should be provided to borrowers on and when they login to their loan servicer’s website,” he says, saying that this will allow borrowers an opportunity to reach out if there’s an error in their payment count. He also says that servicers must implement standardized late and partial payment policies.

As a possible solution, Kantrowitz suggests that if the Education Department doesn’t have a borrower’s complete payment history, they should qualify the missing history toward IDR forgiveness. “That’s the only way to make the borrowers whole if they are unable to reconstruct the payment history,” he says.

The Education Department told NPR that it will be addressing the issue by making operational changes to IDR and added that it will “fix this for the borrowers who have been harmed by past failures with payment counting.” However, despite advocacy groups and experts calling for retroactive payment credit, IDR waivers and payment history correction, the department has not yet released details on its plans to rectify the situation for harmed borrowers.