Student-loan borrowers faced 3.9 million billing errors after entering repayment, a new report from 4 Democratic lawmakers says

• Four Democratic senators released a report on student-loan servicing errors since resuming repayment.
• It found borrowers faced 3.9 million in "billing-related errors," including incorrect payments.
• The lawmakers called for Biden to provide debt relief to borrowers harmed by servicer errors.

Lawmakers have highly scrutinized the return to repayment for millions of student-loan borrowers in the fall. A new report from a group of Democrats offers the latest look into how borrowers fared during the transition.

On Wednesday, Democratic Sens. Elizabeth Warren, Richard Blumenthal, Ed Markey, and Chris Van Hollen released a report on student-loan servicer errors amid the return to repayment.

Exclusively viewed by Business Insider, the report said servicers made over 3.9 million "billing-related errors" once repayment resumed. That's based on data from the Education Department and servicer audits that included over 3 million delayed billing statements from the four major servicers, 280,000 miscalculations for borrowers converting to the SAVE income-driven repayment plan, and 140,000 payment miscalculations due to income, family size, or marital status.

"The four student loan servicers that were under contract with ED at the end of the payment pause had ample time, clear contractual requirements, and sufficient funding from the federal government," the report said. "Yet, they still made a series of mistakes that harmed millions of borrowers when payments restarted."

A letter from the Education Department to Warren in March offered additional details about borrowers' customer-service experiences. The letter, reviewed by BI, said call-abandonment rates surged for every servicer from July to September: Nelnet had an abandonment rate of 41.2%, Aidvantage had a rate of 34.3%, and Edfinancial and MOHELA had a rate of 24.4%.

All servicers had responded to Warren in a series of letters that explained their servicing practices, along with why the return to repayment presented fresh challenges to the industry. In a January letter, MOHELA said that "due to its temporary, mercurial, and extreme nature, the current situation cannot be considered a steady-state environment."

"While additional staff have completed training and begun responding to incoming calls reducing average wait times, the ongoing call volume and call wait times are anticipated to fluctuate throughout the on-ramp period, and after the on-ramp period ends in the fall," MOHELA said, referring to the 12 month on-ramp period that began in October during which any missed payments will not be actively reported to credit agencies.

Notably, also on Wednesday, Warren is holding a hearing to examine MOHELA's servicing practices and its management of the Public Service Loan Forgiveness program. While Warren invited MOHELA's CEO to testify, the company declined on his behalf, saying in a statement that it was "actively engaged in conversations with the Subcommittee and has offered its cooperation in addressing any questions and concerns by participating in a series of bipartisan briefings on the identified areas of interest about student loan servicing."

Given the errors the federal servicers have made since the return to repayment, the Education Department released an accountability framework late last year that included a range of punishments should servicers fail to fulfill their contractual obligations, including withholding their pay and transferring borrowers to better-performing servicers.

"The Department's oversight strategy provides several pathways for identifying in real time problems that may harm borrowers," the department's March letter to Warren said. "Our oversight focuses on the borrower experience, which includes monitoring servicers, tracking complaints, and examining results-based outcomes to conduct a comprehensive review of service performance."

Still, the Democratic lawmakers said in their report that more could be done to help borrowers harmed by servicing errors. The Education Department on Monday released details for its new student-loan forgiveness plan, and the lawmakers urged the department to include in the final rule debt relief for borrowers harmed by servicers.

"To remedy servicers' historic failures and protect borrowers from future harms, there must be a path for debt relief for borrowers harmed by their servicers," they wrote in the report.