Consumer complaint received 2019-02-02
Company: WELLS FARGO & COMPANY
State: TX
Product: Student loan
Sub-product: Private student loan
Issue: Struggling to repay your loan
Sub-issue: Can't get other flexible options for repaying your loan

Complaint:
1 ) The student loans were obtained while attending a school ( XXXX XXXX   College ) for my XXXX  degree and ( XXXX XXXX XXXX XXXX University XXXX XXXX  ) for my XXXX  degree.

2 ) I have not contacted the company yet, I plan to make an appointment with my local branch, but I'm having an uncharacteristically difficult time finding and state/federal statutes or regulations regarding Student Loans.

3 ) My student loans were obtained by Wells Fargo between XX/XX/XXXX - XX/XX/XXXX, to offset the low Veterans Affairs Montgomery  GI Bill benefit amounts* compared to increasing expenses for tuition, fees, books, school materials, parking, fuel, meals, and lack of full-time and part-time employment opportunities for full time day scheduled students, vets ( this was before circa XX/XX/XXXX-XX/XX/XXXX when companies became more Vet friendly ) and in the immediate aftermath of the banking systems housing scam.

*Analyst Note : The Montgomery GI Bill ( MGIB ) was provided a monthly payment of approximately {$1100.00} a month for full-time enrollment. The MGIB has since been replaced by the Post 9/11 Bill which paid academic institutions the amount for tuition ( not to exceed an amount equal to the most expensive state funded university in the state of the vet 's enrollment ), most fees, a semester book stipend and monthly payment to the vet equal to the DoD 's pay scale for an XXXX  rank with dependents based on the current Basic Housing Allowance for the locality of which the vet is enrolled. * 4 ) 6 Loans obtained from Wells Fargo were eventually " consolidated '' after graduation circa XX/XX/XXXX.

5 ) Consolidation was conducted as it was advertised as a simple solution to pay a single payment, which could be conducted quickly online, instead of being forced to manage 6 separate checks and/or transfers. I believe I was also offered a reduction in interest rates to do so, but I might not have evidence to support.

6 ) Interest in banking practice stemming from conversations with my federal partners during the recent shut-down has led to initial review of banking practices regarding my student loans that have, at first glance, presented Wells Fargo activities regarding my accounts, which are indicative of suspicious, unethical or unfair practices.

7 ) Consolidation is defined as " the process of uniting ( XX/XX/XXXX, common definition 2 ), which refers to taking two or more separate entities and merging them into a single entity.

8 ) Wells Fargo apparently defined consolidation of taking six separate student loans, now keeping them separate, with separate principal amounts and variable interest rates, and separate percentages of my single payment divided amongst the accounts. Interestingly, the online user platform shows the account as a singular entity in the accounts tab. Clicking on the specific account then breaks down the account into the separate accounts. The only actual consolidation is appears to be from the payee with respect to method of repayment. Again, instead of writing and submitting six checks or making six online transfers or a combination of the two, I now make a single payment.

I would argue that this practice is not a reasonable representation of consolidation and the benefit of consolidation, upon closer review, appears to be for Wells Fargo as processing multiple payments on the scale Wells Fargo conducts would result in significant savings for Wells Fargo, costing them only the one time cost of creating the illusion of consolidation to the consumer.

Another point of interest in this scheme is the process of dividing the singular payment amongst the totality of accounts. I have yet, again I have only been researching for a few days, found a option through the online user platform to dictate how I want my payments to be dispersed amongst the accounts, but again, why would I need to, they were supposed to be consolidated into a singular account.

9 ) It currently appears that Wells Fargo is potentially utilizing an algorithm to disperse the repayment amongst the accounts in a manner that minimizes repayment of principal and fails to focus the remainder of the payment, not utilized for minimum payment requirements per account, in a manner that a reasonable person would focus repayment. Specifically, spending the leftover portion on paying down the account with the highest interest rate or the account with highest principal balance with highest interest rate.

I currently, as of XX/XX/XXXX have the following account breakdown : act 1 Principal Balance ( PB ) {$5000.00} with 5.5 % Variable Interest Rate ( VIR ), act 2 PB {$3400.00} with 5.5 % VIR, act 3 PB {$8300.00} with 5 % VIR, act 4 PB {$3100.00} with 7.99 % VIR, act 5 PB {$2500.00} with 7.99 % VIR, and act 6 PB {$2900.00} with 12.49 % VIR.

It appears that the accrued interest per account is as follows : act 1 {$270.00} Interest Accrued ( IA ), act 2 {$190.00} IA, act 3 {$410.00} IA, act 4 {$250.00} IA, act 5 {$200.00} IA and act 6 {$360.00} IA.

My last payment was broken down as follows : Single online payment of {$270.00} which was broken into act 1 {$23.00} Principal Payment ( PP ) with {$26.00} Interest Payment ( IP ), act 2 {$16.00} PP with {$18.00} IP, act 3 {$41.00} PP with {$39.00} IP, act 4 {$10.00} PP with {$24.00} IP, act 5 {$8.00} PP with {$19.00} IP, and act 6 {$14.00} PP with {$35.00} IP.

Further review shows that since repayment started, act 4 has {$880.00} IP compared to {$540.00} PP, act 5 has {$720.00} IP compared to {$430.00} IP and act 6 has {$1200.00} IP compared to {$1000.00} PP.

*Analyst Note : Based off total Principal Balance and Interest Accrued based on the Variable Interest Rates, act 6 should be the primary account repayment focus, followed by act 4, then re-evaluation. However, the minimum required payment per account is an unknown variable. * In closing, I suspect that the Wells Fargo may be practicing " predatory '' loan activities, that fails to clearly state that their definition of consolidation is regarding the main screen of the online user platform 's accounts page which provides a singular account number to represent multiple completely unconsolidated loan accounts and that consumer loan repayment method is consolidated by the user at the cost of the consumer 's ability to structure repayment focus in a reasonable manner to expedite complete loan repayment.

The current method that Wells Fargo uses to disperse payments is suggestive of purposeful attempts at prolonging loan life in order to maximize accrued interest per account, and speculatively, to increase probability of being able to charge for a late or service fee.

At the very least this practice should be viewed as highly unethical, and given Wells Fargo 's other recent criminal activity regarding consumer account fraud to artificially inflate sales and earnings, which I believe, traces back to the same time period that the consolidation offers were made.

I would ask the CFPB look into this matter to see if my assessment merits further investigation.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation