Payments increase due to loan provider’s billing error

Sallie Mae, provider of one-third of all federally insured
student loans, discovered last week that it had been under-billing
some of its loan recipients and raised the monthly payments on
these loans from 25 to 40 dollars per month.

This increase only affected variable rate loans that are
currently being repaid by recent graduates. Current students
were not affected because they have not yet been billed, said
Martha Holler, Sallie Mae spokesperson. 

The period of active repayment begins six months after a student
graduates. Students who have begun paying off their loans while
still in school are not in active repayment ““ and are
thus not affected by this increase ““ because they are paying
ahead of schedule.

While individuals who were under-billed will have to pay more
each month, they will ultimately pay the same amount for which they
were originally contracted.

People who were being under-billed were actually paying more in
interest, because their unpaid balance, upon which the interest is
charged, was larger than it should have been. However, borrowers
will have any extra paid interest credited to their accounts, and
anyone unable to pay the increased monthly fee will get an
extension on their loan, Holler said.

The Sallie Mae company discovered the glitch when an individual
who was reaching the end of his ten-year payment schedule found
that he had more payments remaining than he should have had.