Borrowers are experiencing errors with student loan payments being pulled from their bank accounts by servicers.

• Federal student loan borrowers are frequently encouraged by lenders to enroll in automatic payment plans, which may result in a slightly lower interest rate.
• A new report from the Consumer Financial Protection Bureau reveals that companies can mistakenly withdraw funds from borrowers' bank accounts and that it can take months for refunds to be processed.

Lenders frequently suggest that federal student loan borrowers opt for automatic payment plans. This may appear to be a wise choice: borrowers can avoid missing payments and may receive a lower interest rate as a result.

A report by the Consumer Financial Protection Bureau warns that a decision to back off on lending regulations could result in consumer abuses in a lending space already plagued with such issues.

"Autopay errors were the most common, fundamental, and significant servicer errors seen by CFPB Student Loan Ombudsman Julia Barnard this year," she said. "These errors are extremely costly and unacceptable."

Despite never consenting to autopay, some borrowers had money taken from their bank accounts. Additionally, other autopay users experienced incorrect amounts being charged or multiple charges in the same month.

Holiday costs can be easily afforded by those who can pay off their credit card balances quickly.

Last year, CNBC reported on a woman who believed she had no monthly student loan payments under her enrolled plan, but was unexpectedly charged $2,074. This led her to worry about making her mortgage payments.

In March, a borrower informed the CFPB that their student loan servicer mistakenly deducted $6,897 from their account, despite owing only $1,048.

According to Barnard, borrowers have informed the CFPB that these errors have made it difficult or impossible for them to meet basic necessities such as food, medical care, and rent.

What borrowers can do about autopay errors

Although some student loan borrowers encounter difficulties, higher education expert Mark Kantrowitz advises maintaining enrollment in automatic payments.

To obtain an interest rate discount, he stated that it is necessary to save a minimum of 0.25%.

He added that they are less likely to be tardy with a payment.

To avoid being overcharged, some borrowers on a tight budget may choose to forego certain benefits, experts advised.

Kantrowitz advised taking steps to prevent incorrect billing.

Setting up an alert with your bank to notify you of any debit over a certain amount can help you ensure that the debit is correct each month and keep a record of your payment history, which can be beneficial for those seeking loan forgiveness, according to Kantrowitz.

If your loan service mistakenly deducts the wrong amount from your bank account, you should promptly contact the servicer and request a refund, advised Kantrowitz. Additionally, you should request your servicer to cover any late fees resulting from bounced checks or an overdraft.

Unfortunately, borrowers have reported not receiving timely refunds from the CFPB, as stated by Barnard.

Autopay errors have resulted in borrowers waiting months or even years for refunds, she stated.

She recommends that borrowers contact their bank about incorrect payments.

If the borrower notifies their financial institution within 10 business days of an autopay amount error, the institution may be able to quickly resolve the issue.

If you encounter difficulties with your servicer, you can submit a complaint to the Education Department's feedback system at Studentaid.gov/feedback. Additionally, you can report issues to the Federal Student Aid's Ombudsman, as advised by Kantrowitz.