The U.S. Department of Education has acknowledged a data error in a legal filing that could impact a lawsuit seeking to restore the benefits of the REPAYE repayment plan, a precursor to the Biden administration’s SAVE plan.
Two key developments emerged this week:
- The Education Department corrected a court filing on Monday, admitting that income data for five borrowers in the lawsuit was incorrectly reported as $0 when it was higher. Officials attributed the error to a 2024 update to the National Student Loan Data System (NSLDS), which removed older data and failed to retain some borrowers' income information.
- The department also confirmed that SAVE plan borrowers began receiving 90-day notices on July 1 to transition to a new repayment plan, with involuntary transfers to standard plans scheduled for as early as September 29 if no action is taken.
The corrected filing, submitted by loan analyst Anthony Lowery, stated that the NSLDS error occurred because the system does not retain income data when records are updated. Lowery added, “I was not aware that NSLDS records a borrower's income as $0 when the system has no data.”
Immediate Impact on Borrowers
The legal correction comes as part of an ongoing lawsuit filed by student-loan borrowers aiming to restore REPAYE benefits and pause the forced transition off the SAVE plan. The lawsuit argues that borrowers need the specific protections of REPAYE, which the SAVE plan replaced. The Education Department’s admission of the data error raises questions about the accuracy of income reporting for borrowers nationwide, as the NSLDS is the federal database used to track student loans.
Borrowers have reported additional glitches in the repayment system, including inaccurate bills and erroneous past-due notices. The Education Department has acknowledged these issues but has not provided a timeline for resolution.
Policy Shifts and Repayment Changes
The July 1 changes to federal student loan repayment have introduced a new income-driven repayment option, shifting rules to depend on when borrowers took out their loans. The SAVE plan is no longer available, and borrowers must now navigate alternative repayment strategies. The department has emphasized that forgiveness programs remain intact, but the pathways to discharge balances have changed.
Borrowers are advised to review their loan accounts on the Federal Student Aid website to understand their repayment options and eligibility for forgiveness. The department has not indicated whether the NSLDS error will affect broader repayment or forgiveness processes beyond the lawsuit.
Legal and Political Context
The lawsuit and the Education Department’s correction highlight ongoing tensions over student loan repayment policies. Advocates for borrowers argue that the transition from REPAYE to SAVE and now to new repayment plans has created confusion and financial strain. Critics of the Biden administration’s policies contend that the changes are necessary to address long-term affordability but acknowledge the administrative challenges.
The Education Department has not commented on whether the NSLDS error will lead to broader reviews of the repayment system. Borrowers awaiting a ruling on the lawsuit’s request to pause the SAVE transition are expected to receive a decision in the coming weeks.