Consumer complaint received 2023-09-10
Company: MOHELA
State: CA
Product: Student loan
Sub-product: Federal student loan servicing
Issue: Dealing with your lender or servicer
Sub-issue: Don't agree with the fees charged

Complaint:
Since XXXX I have been making payments towards my federal student loan debt. Servicing of my federal student loans was transferred to the Missouri Higher Education Loan Authority ( MOHELA ) somewhere between eight to ten years ago. When the initial servicing transfer occurred, I had nine separate loans. 

I have made significant sacrifices to pay down my principal balances as much as I could during the pandemic forbearance, successfully paying off two of my loans ( Loan ID # s XXXX and XXXX ). I submitted a change in terms request to change to a standard repayment schedule, which was effective as of XX/XX/XXXX. As of the resumption of accrual of interest on XX/XX/XXXX, my principal loan balance for the seven loans currently serviced by MOHELA was {$41000.00}. 

After enrolling in the standard repayment option, I noticed a severe and predatory discrepancy in MOHELAs calculation of the payments required to satisfy my loan balances. At first glance, the monthly payments for each loan appeared much higher than they should be. To confirm my suspicions, I tested the Annual Percentage Rate ( APR ) for each loan using the Federal Financial Institutions Examination Councils ( FFIECs ) APR calculator. 

Much to my dismay, the calculations showed a substantial discrepancy in the interest assessed over the life of the loans between what MOHELA was charging and what the interest should have been on a standard fully amortizing repayment schedule. Based on my calculations, if I repaid the loans under MOHELAs standard payment terms, I would wind up paying an additional {$9600.00} in interest. The calculated APRs based on MOHELAs payment streams are substantially higher than the interest rate, ranging from 8.504 % up to 19.553 %. 

Interest has always accrued at a higher rate than I could repay the debt. For years I stressed and endured financial hardship trying to keep up with my student loan payments. I am astonished and disgusted at MOHELAs illegal and predatory assessment of interest and I initially voiced my concerns and inquiry to MOHELA on XX/XX/XXXX. As of the date of this letter, I have not received any response from MOHELA. 

As of the date of this complaint, XX/XX/XXXX, I have now refinanced five of my seven existing loans through XXXX which will be paid off shortly. In the event the Agencies receiving the complaint and/or MOHELA determine that MOHELA has been inaccurately and illegally accruing interest over the life of my nine loans, I request a full refund of all overpayment of interest. 

After manually recalculating MOHELAs calculated payments based on the contractual interest rate, I feel that a large part of the pain, suffering, and financial hardship I have experienced over the life of my loans is due in part to MOHELAs miscalculations. I sincerely hope that the Agencies I have contacted perform a detailed assessment of MOHELAs interest and payment calculations to determine if millions of additional borrowers have been impacted by these illegal and predatory servicing practices.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation