Consumer complaint received 2018-07-24
Company: Navient Solutions, LLC.
State: TX
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:
The following formal letter of dispute describes what happened with Navient : XX/XX/XXXX Formal Letter of Dispute I am filing a formal letter of dispute regarding capitalized interest charges on XX/XX/XXXX and XX/XX/XXXX. I believe these charges could have been avoided with proper communication, and thus Navient did not act in my best interest regarding my student loan debt. Written communication was insufficient, obscuring some information, and omitting highly important information. Also, counseling advice via telephone was either ignorant, negligent, or outright predatory. These issues resulted in a direct cost to me of over {$3000.00} in XX/XX/XXXX ( which continues to accrue interest ) as well as the potential loss of additional benefits, namely Public Service Loan Forgiveness ( PSLF ) eligibility. 

Shortly after I completed my XXXX, I was enrolled in an Income-Based Repayment ( IBR ) Plan making regular on-time payments. I was also on a Partial Financial Hardship ( PFH ) which from what I now understand was what qualified me for reduced payments of {$130.00} per month. Prior to a phone call I made to Navient on XX/XX/XXXX ( with a representative named XXXX who was kind and helpful ), I do not remember ever receiving any documentation or verbal communication about what PFH was or how it was different from/related to IBR. Prior to this I thought I was simply in an IBR Plan which was keeping my payments affordable. After a year of full-time salaried employment, I was able and ready to increase my monthly payments in an effort to reduce my overall loan cost. 

With regard to written communication, I did receive letters in XX/XX/XXXX stating that In order to keep your lower payment amount, its important that you reapply and If you choose not to renew your plan, your new payment amount will be {$630.00} [ and {$180.00} ] beginning on XX/XX/XXXX [ and XX/XX/XXXX ]. Payment amounts and dates were bolded. I WANTED to increase my payments at that time and was aware of the new monthly payment amount after talking with a phone counselor ( see below ), so I did not reapply because I thought renewing the plan meant keeping those low monthly payments ( which would necessarily extend my loan and cost me more ). Of note, the letters OMITTED the fact that if I did not reapply I would immediately be charged {$3000.00} in capitalized interest. If Navient was truly acting in the borrowers best interest, this information would have been specific ( with the stated amount ), would have been placed right alongside the notification about specific payment increases, and would have been bolded itself. Instead, a single non-specific statement about capitalized interest was obscured in a FAQ footnote on the back page. Given that Navient stated in the letter exactly how my monthly payments would change, Navient also likely knew how much capitalized interest would be applied. I believe Navient failed to fully inform me about a very significant cost that could have very easily been avoided. In addition to the capitalized interest issue, the letters also failed to inform borrowers about potential loss of other benefits ( i.e., ineligibility for PSLF programs ) without renewal. This notable omission may be related to the fact that the PSLF program is offered by one of Navients competitors and not by Navient. In summary, written communication was clearly focused on monthly payment reduction ( resulting in loan extension ultimately benefiting Navient ), rather than warning the borrowers of huge capitalized interest charges and potential loss of eligibility for benefits offered by a competitor. 

With regard to telephone counseling, I know that I called Navient and spoke with a counselor about this. I am hopeful that Navient can review their phone records, and I hope they are in fact recorded. I specifically remember in the phone call that the counselor reviewed my loans and did some calculations with me on the phone based on the new salary estimate I provided her. Thus, I knew I would be expecting about an $ 800 monthly payment and I wanted to pay this amount to reduce overall costs. During this long phone call, at no time did the counselor inform me about the huge capitalized interest costs I would immediately incur or the ( possible ) loss of PSLF eligibility that would apply should I change from this plan or not renew the plan. At no time did she discuss the benefits of staying on/renewing the income-based repayment plan ( i.e., saving capitalized interest and PSLF eligibility ). I certainly would have signed a simple recertification/application form if I would have been informed of these extremely costly negative consequences. 

In retrospect, I believe an informed counselor acting in a borrowers best interest would have advised me to renew the IBR ( to avoid capitalized interest charges of over {$3000.00} and remain eligible for PSLF ) and simply make higher payments if I felt I could. This was absolutely never explained to me. I am just now becoming aware of what happened and how it now affects me. 

Again, I believe Navients written communication and telephone counselors were not acting in my best interest regarding my student loan debt. Poor communication and bad counseling advice resulted in a direct cost to me of over {$3000.00} in capitalized interest which was immediately applied on XX/XX/XXXX and XX/XX/XXXX when the program expired and continues to accrue interest as well as the potential loss of PSLF eligibility. 

Per Navients website, they state that they follow a proven process of corresponding and communicating with borrowers to share important information and guidance. Navient did nothing of the sort for me. Navients written communication and telephone counselor failed to share important information and instead offered guidance that was misleading and damaging, costing me thousands of dollars while adding to their bottom line. 

Without a student loan I would not have been able to return to school and have a good career, so for that I am grateful. I also acknowledge that I am obligated to pay my student loan debt. To give a bit of insight into the level of stress borrowers face, my total disbursements were {$69000.00}. As of today, I have paid {$15000.00} and my current balance is {$78000.00}. I realize this is the nature of loans ; however, student loan servicers should act in the best interest of their borrowers, particularly those with a history of financial hardships, which includes clear communication and accurate counseling advice. I am hoping that we can find a resolution to this. 

( signed my name ) A few days later I received a letter in response to my formal complaint in my Navient Inbox stating : " We are unable to remove the capitalization as it is valid. '' This simple response in NO WAY addressed any issues I raised. It was simply dismissive.

Company response to consumer: Closed with explanation