Computer error means higher loan payments for 1 million graduates

by Amy Horst

One million people whose student loans are managed by Sallie Mae, the nation’s main guarantor of student loans, will be paying more than they expected because of a glitch in Sallie Mae’s software.

The software error has been present since the early 1990s. Because of the error, loan recipients were undercharged for more than 10 years and must now make up the amount they underpaid.

The University stopped using Sallie Mae in 1996 when it switched from the Federal Family Education Loan Program to direct lending. Direct loans are more convenient and less costly because they deal only with the government rather than with banks, said Kris Wright, director of the Office of Student Finance.

When the University was using Federal Family Education Loans, it processed loans from more than 550 banks around the country.

People with variable-rate loans who are currently repaying their loans will be affected by the error.