Consumer complaint received 2018-12-05
Company: MOHELA
State: CO
Product: Student loan
Sub-product: Federal student loan servicing
Issue: Dealing with your lender or servicer
Sub-issue: Received bad information about your loan

Complaint:
I have a large amount of student loan debt, $ XXXX+. I have always been on an income driven repayment plan ( IDR ), specifically the income based repayment plan ( IBR ). I recently inquired of my loan servicer Mohela about lowering my interest rate or what other options I had available to me, and this was on or about XX/XX/2018. The representative told me about REPAYE, a revised pay as you earn plan that provides interest incentives. The deal was the following, changing plans would require any outstanding interest I had to capitalize, and the interest that my monthly payment did not cover ( because these plans assist people whose monthly payments do not cover the full interest that accrues per month ) would be paid by the government at 100 % for the first 3 consecutive years for my subsidized loans, and at 50 % for my unsubsidized loans. While I wasn't thrilled about capitalizing the outstanding interest, which was rather substantial at $ XXXX, the interest incentives were great, especially the deal on the subsidized loans. I applied for REPAYE a few days later. I was approved around XX/XX/2018. I made another call to Mohela shortly after that to inquire how much of the interest will be paid by the government. The representative provided me a detailed explanation, including the 100 % covered subsidized loan interest. Following my first payment made on REPAYE ( XX/XX/2018 ), I called Mohela on XX/XX/2018 to check when I would see the government payment/credit for the interest paid. I was unable to get any answers, so I sent a secured message on my Mohela account to ask the same question. It was only then that I was told that the 3 year 100 % government paid interest incentive on subsidized loans is a ONE TIME deal covered under any IDR plan. And because I was on IBR for more than 3 years, I already used up that 3 year incentive. What?? No one explained this. More importantly, the REPAYE application specifically says the 3 year incentive of 100 % government paid interest applies to the first 3 consecutive years on the plan. NO where on the application does it say that this incentive is a one time deal. I have been misled and as a result, I am now accruing interest at a higher amount due to my principal balance increasing ( as a result of capitalizing the unpaid interest ). Mohela refuses to do anything. On XX/XX/2018, I called Mohela regarding their mistake.I was told the Department of Education is the only place to help me. I have submitted a complaint to the Office of Inspector General. Mohela acknowledges their representative gave me incorrect information on XX/XX/2018. Mohela misunderstood my concern and stated that I was told and acknowledged that my unpaid interest would capitalize. I never misunderstood this. I always understood that the interest would capitalize once I changed payment plans. I was told a lie when their representative said I would get the 3 year interest incentive. Mohela 's solution? To give their employees better training. This is unacceptable. I changed payment plans to help with overwhelming interest amounts. Now I'm paying more in interest because of their mistake.

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