WASHINGTON, DC — Federal student loan repayments officially resumed Tuesday morning, at which point roughly 40 million Americans logged into their servicer portals for the first time since the Trump-Biden-Trump forbearance era and discovered, to varying degrees of horror, that the principal they had been ignoring had used the five-year pause to get into the best shape of its life.
Borrowers who entered the pandemic owing $34,000 reported logging in to find balances of $41,500, $43,800, and in one Reddit-confirmed case, $58,200, a figure the borrower’s servicer described in an automated email as ‘the result of accrued interest, capitalized interest, and one $7 late fee from March 2020 that we held onto for sentimental reasons.’
‘We’re thrilled to welcome our valued borrowers back into active repayment,’ said Lindsay Crail, senior director of borrower experience at MOHELA, in a statement that was somehow 800 words long. ‘During the pause, we worked hard to ensure every account remained accurate, current, and compounding daily at 6.8%. Many borrowers will be pleasantly surprised by how much their loan has grown alongside them.’
The Department of Education confirmed Tuesday afternoon that, in addition to the resumed monthly payment, borrowers will be charged a one-time ‘Reactivation Convenience Fee’ of $39, which a spokesperson clarified is not a fee on the loan but rather a fee for the privilege of being allowed to pay the loan, a distinction the spokesperson described as ‘extremely important from an accounting standpoint and not at all important from a moral one.’
Several borrowers attempting to log in encountered a new servicer landing page featuring a smiling cartoon graduate and the message ‘Welcome back! Your future is waiting,’ beneath which a smaller line of text disclosed that anyone enrolled in SAVE, PAYE, REPAYE, or IBR should assume they are currently enrolled in none of them and should call a number that has been busy since approximately 7:14 a.m. Eastern.
Mark Helms, 34, a marketing analyst in Columbus who had set up autopay in 2019 and forgotten about it, told reporters he received a notification Tuesday that his autopay had successfully resumed at $312 a month, which was news to him because his current monthly payment is $890. ‘I asked the chatbot what happened to the difference,’ Helms said. ‘It told me my account was in good standing and asked if I’d like to refer a friend.’
Treasury officials, asked whether the resumption of payments would meaningfully reduce the federal deficit, responded that the receipts from 40 million returning borrowers would cover roughly four days of interest on the national debt, ‘which is honestly more than we expected, and certainly more than the borrowers expected to cover personally.’
At press time, the Education Department had clarified that the five-year pause itself was technically a separate, interest-bearing instrument now coming due, payable in full, in a balloon payment, on a date the Department described as ‘soon.’