Millions of student loan borrowers were promised an interest-free break. This woman's debt is still growing
Earlier this month, Ellie Bruecker received a troubling notice from her student loan servicer, Mohela.
"Although no payments are due at this time, interest continues to accrue on your loan(s) during the forbearance period," Mohela wrote to Bruecker in the June 1 letter, which CNBC reviewed. "You have the option to pay the interest during the forbearance."
The problem: The U.S. Department of Education had promised borrowers who were enrolled in the so-called SAVE forbearance, including Bruecker, that interest would not accrue on their debt. Millions of borrowers were switched into the payment pause in the summer of 2024 after the Biden administration-era repayment program — called the Saving on a Valuable Education plan — became tied up in legal challenges due to its generous terms.
The Trump administration has not said when that forbearance will end, and recently it released information showing that nearly 2 million student loan borrowers were stuck in a backlog of applications to get into other available repayment plans.
Despite the government's promises, Bruecker's student debt has grown by around $3,000 during the roughly year-long SAVE reprieve, her loan documents show.
"I saw those numbers and my eyes bugged out of my head," said Bruecker, 34.
She's not the only SAVE borrower seeing interest accruing: Other people facing the same issue have taken to social media to try and get answers.
At one point, around 8 million people were enrolled in the SAVE plan, according to the Education Dept.
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Bruecker happens to work as the director of research at The Institute for College Access & Success, a nonprofit that does advocacy work in the higher education space. But she wonders how many student loan borrowers will even know that this wasn't supposed to happen, let alone be able to get it corrected.
"Will they resolve this for everyone, or just those who get them on the phone and are loud about it?" she said.
It's unclear how widespread the issue is.
A spokesperson for the Education Dept. did not answer CNBC's questions about the issue some borrowers are facing, but said that those "enrolled in the SAVE Plan remain in a forbearance that is not accruing interest."
Mohela did not immediately respond to a request for comment.
But Mohela has a notice at the top of its website that reads: "If you recently received an interest notice for your student loan account, please know that this is not a bill, and no action is necessary at this time."
The notice goes on to say that, "For borrowers on the SAVE administrative forbearance, interest is currently set at 0%. Refer to your loan details in your notice."
The company does not say that the alerts were sent in error, but they likely were, said higher education expert Mark Kantrowitz.
"MOHELA sent out misleading notices to their borrowers who are in the SAVE repayment plan," Kantrowitz said.
"Borrowers who are worried about the MOHELA letter should check their loan history to see if the balance has changed," Kantrowitz added. If their debt has grown since July 2024, "they should contact MOHELA," he said.
Bruecker said her loan records from both Mohela and the Education Dept. reflect a higher balance after roughly around $3,000 in interest was added to her debt during the forbearance.
"Mohela has been allowing interest to accrue the entire time my loans have been in this SAVE forbearance," she said.
She tried to contact Mohela to correct the error, but said she was unable to reach a representative despite waiting on the phone for hours.
In recent months, the Trump administration has terminated around half of the Education Department's staff, including many of the people who helped assist borrowers when they ran into issues like this one. A federal judge has ordered Trump officials to reinstate the terminated employees, but the administration is now asking the Supreme Court to block that order.
"With the level of dysfunction at the Education Department right now, I have a real distrust this is going to get resolved for people," Bruecker said.
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