Consumer complaint received 2020-12-17
Company: Nelnet, Inc.
State: CA
Product: Student loan
Sub-product: Private student loan
Issue: Dealing with your lender or servicer
Sub-issue: Trouble with how payments are being handled

Complaint:
I have a student loan with Nelnet. I have been on an automatic payment with them since XX/XX/XXXX when my loan was sold to them from another student loan company. I have been paying over the minimum to eliminate my loan faster. 

Recently I looked up how much principal I had left to pay on my loan. I noticed that it seemed high given the amount I had been paying. When I looked at my past payment history, I noticed that between XX/XX/XXXX and XX/XX/XXXX, an abnormal amount went to paying my interest ( close to 100 % over this time period - I've attached screenshots pulled from today, XX/XX/XXXX XXXX instead of paying down my principal. So far in XXXX, I've now paid {$2300.00} in interest on a loan who's interest rate is 4.5 % and principal in XX/XX/XXXX was {$24000.00}. At maximum, I should have paid at most {$1100.00} in interest with no reduction from the beginning of the year principal. This means I've overpaid interest by at least {$1200.00} this year. 

I first contacted Nelnet on XX/XX/XXXX. I immediately received a canned response saying they would respond to me ASAP. I didn't hear back for a week, so I sent a follow up email on XX/XX/XXXX. I received an email asking for more information regarding the problem and my account that same day. I immediately responded. I finally got another message on XX/XX/XXXX with the following statement : " '' '' Thank you for contacting Nelnet. 

When each payment is received, it is first applied to outstanding and accrued interest, and finally to principal. If your account is on an Income Driven Repayment plan your payment will be applied to accrued interest first, then fees ( if applicable ), and then to principal. Once the outstanding and accrued interest has been fully satisfied, any additional amount received is automatically applied to principal. 

If you pay more than your current amount due : + Any payment amount higher than the current amount due will be allocated across loans in repayment status with the highest interest rate. * Once the loans in repayment status with the highest interest rate are paid in full, any remaining payment amount will be allocated across the loans with the next highest interest rate. 
+ If none of your loans are in repayment status, payments are first allocated to outstanding fees ( if applicable ) and then to interest beginning with loans with the highest interest rate. Once all outstanding fees ( if applicable ) and interest have been paid on the loans not in repayment status, remaining payments will be allocated across unsubsidized loans and then subsidized loans beginning with loans that have the highest interest rates. 

*If two or more loans in repayment status have the highest interest rate, the payment will be allocated first to the unsubsidized loans and then to the subsidized loans, in proportion to each loans regular monthly payment amount.

Also when you pay more than your current amount due, your due date on loan groups in repayment status will advance by one month each time you satisfy the regular monthly payment amount for that group. Your monthly billing statement will show {$0.00} due for that loan group. Because your excess payment will continue to be applied to the loan group with the highest interest rate, you will continue to have an amount due for loan groups with lower interest rates. '' '' '' I responded the same day that this did not resolve my problem and that their response had nothing to do with my problem. I'm still waiting to hear back from them.

Company response to consumer: Closed with explanation