Consumer complaint received 2020-01-25
Company: Nelnet, Inc.
State: NY
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 am submitting a formal complaint to the appropriate agencies/officers/representatives regarding my student loan servicer, Nelnet, and Nelnet 's processing of my Income Driven Repayment Plan re-certification application resulting in an unnecessary delay causing the accrued interest on my outstanding loans to capitalize. I am seeking the appropriate remedy of reversing the erroneous capitalization of interest to the principal balance of loans. 

I submitted the appropriate application, and supporting documentation in a timely manner to Nelnet ; however, Nelnet did not consider my submission of documentation and re-certification application to be complete based on Nelnet 's incorrect interpretation of the application. The incidents outlined below are the most egregious and reflect a pattern of deceptive, predatory, and unfair practices perpetuated by Nelnet that is detrimental to me as the borrower. 

I have a student loan balance of approximately {$150000.00} ( now approximately {$170000.00} after the interest was capitalized erroneously. I have been making payments to Nelnet, my student loan servicer, under an income based repayment plan since XX/XX/XXXX. I received notice from Nelnet in late XX/XX/XXXX to certify my income to continue the payment plan by XX/XX/XXXX. I submitted my application as directed using the Income Driven Repayment ( " IDR '' ) Plan Request ( XXXX  No. XXXX ) application. The questions I answered instructed me to submit a copy of my most recent federal income tax returns. I effectively completed and submitted the required documentation and information in a timely manner to Nelnet. 

On or about XX/XX/XXXX, I received an email from Nelnet with the amount of my upcoming payment ( which I receive monthly emails from Nelnet with payment reminders ) ; however, the amount of the payment was twice the amount of my previous payments and is half of my monthly income. I contacted Nelnet to learn that Nelnet did not consider my documentation sufficient and incorrectly applied the details in my application as Nelnet 's rationale for why Nelnet treated my submission incomplete. The consequence of Nelnet 's failure and unacceptable conduct has capitalized the accrued interest on my student loans that increased my principal balance by approximately {$21000.00} to {$30000.00}. To clarify, Nelnet did not process my submission as required thus, resulting in Nelnet treating my repayments to no longer be under the income based plan, and then also increasing my principal balance by over {$21000.00}. 

I have spent countless hours speaking with representatives from Nelnet to resolve this error to no avail. I have also been discovering historical misconduct by Nelnet and a pattern of deceptive, predatory, unfair, and unacceptable practices perpetuated by Nelnet. For instance, during my discussions with Nelnet representatives on this matter, we reviewed the history of my repayments, and I learned that by enrolling in an auto-debit plan several years ago, Nelnet automatically entered me into a forbearance or deferment on XX/XX/XXXX when my payment is due. When speaking with Nelnet, I was advised that while my complaint and dispute is under review, the payment due this month will not be adjusted to the income-based amounts. I made the higher payment anyway because I did not want my loan to be put in forbearance ; however, Nelnet applied a forbearance to my loans for a ONE DAY PERIOD - the reason Nelnet explained was that the auto-debit processes 24 hours behind and did not register on my account before the forbearance designation was added. In other words, this was a failure of the processes within the departments at Nelnet and causes an unnecessary, unmanageable hardship on the borrower. This sham forbearance was NEVER brought to my attention, if I was not discussing the existing dispute ( continued in depth below ), then I would not have discovered this horrific practice by Nelnet. This effect is NOT identified to the borrower and is NOT communicated in a reasonable manner to ensure the borrower is aware of the material impact this may cause.

The nature of the IDR Plan application questions and instructions is described in the following text ; however, another critical defect in Nelnet 's conduct is that I was NOT contacted by a representative, sent an email, nor had a letter sent to me in the mail to notify me of Nelnet 's erroneous determination for me to submit another document in addition to my tax returns to continue processing my IDR application to continue the income based repayment plan. 

Further to my earlier point regarding the IDR Application form and the language in the instructions that I detrimentally relied upon, I will identify the section and item number in the application which will be accompanied by critical details that have led to an improper and unacceptable outcome. 

For context to the issues described, my husband is serving in the United States Military and is on XXXX XXXX. This point will be relevant to the circumstances explained below. 

Section 4a, Item 7 ) What is your Marital Status? '' I selected the option, " married, but can not reasonably access my spouse 's income information - you will be treated as Single. Skip to Item 11. '' Here, I selected this option because I am in fact married ; I am not legally separated. I also chose this option because my husband is stationed outside of the state in which I am currently residing and I am unable to reasonably obtain his income information other than our XX/XX/XXXXjointly filed federal income tax return - this has NOT caused any significant decrease in our income.

Section 4b, Item 11 ) Has your income significantly decreased since you filed your last federal income tax return? 
I answered, No which then instructs me to provide my most recent federal income tax return and skip to Section 6.

I answered, no to the above question because my income has NOT significantly decreased since my last federal income tax return. While I do not reasonably have access to my husbands income information while he is on XXXX XXXX, his XXXX XXXX status did NOT cause my income to significantly decrease since my last federal income tax filing. 

In other words, the example that is provided below the controlling question reads as potential scenarios that MAY cause income to significantly decrease, but my income did NOT and has NOT decreased significantly when my husband reported for XXXX XXXX in the military. For convenience, I have inserted the exact language in the example : For example, have you lost your job, experienced a drop in income, or gotten divorced, or did you most recently file a joint return with your spouse, but you have since become separated or lost the ability to access your spouses income information? 

Therefore, while I am not able to readily access my husbands income information, it has NOT caused our income to significantly decrease since the filing of our last federal income tax return for the taxable year of XX/XX/XXXX that we filed jointly. 

Section 6 : Borrower Requests, Understandings, Authorization, and Certification Note that the instructions from Section 4, direct me to skip over to Section 6. Thus, I am not subject to the information in Section 5 which contains instructions for documenting current income that is prefaced with the following language, You only need to follow these instructions if, based on your answers in Section 4, you and your spouse were instructed to provide documentation of your current income instead of a tax return. 

To reiterate, the appropriate options that I selected in Section 4 directed me to proceed to Section 6 and to submit my most recent federal income tax filing.

On Page Four ( 4 ) directly below the signature fields, there are instructions and directions as to when a spouse may not be required to sign the form. The text is written as, If you are married, your spouse is required to sign this form UNLESS you are separated from your spouse or youre unable to reasonably access your spouses income information. 

As previously stated, my husband is serving in the military and is on XXXX XXXX ; I am unable to reasonably obtain his income information ; however, our income has NOT significantly decreased since our XX/XX/XXXX JOINTLY filed federal income tax return. Therefore, my husband is not required to sign the form.

In summary, I submitted a completed re-certification application, and the proper income documentation as instructed throughout the application. I submitted a XX/XX/XXXX jointly filed federal income tax return to evidence our income which has NOT significantly decreased since that time. 

Nelnet claims that they requested additional documentation but I did NOT receive any correspondence by any means ( email, or postal service mail ) to notify me that Nelnet sought a current income document. Irrespective of Nelnets failure to properly notify me of this request, Nelnets request is entirely baseless. There is no reason I would be subject to the additional documentation requirement pursuant to the guidance, and the terms and conditions memorialized in the IDR Plan Request re-certification application. 

To conclude, I am respectfully demanding necessary relief that will reverse the capitalization of the accrued interest on my loan, and to adjust any upcoming payments to be calculated based on the principal balance after the capitalized interest is deducted from the principal outstanding balance. This appropriate remedy will reverse the effect of an ERRONEOUS type of penalty imposed by Nelnet when Nelnet caused the accrued interest to be capitalized after Nelnet improperly delayed processing my re-certification on an incorrect basis that is contradictory to the terms, conditions, and instructions featured in the IDR Plan Request form. 

Thank you in advance for your consideration and expeditious attention to this time sensitive matter. In addition to any reply via email or postal service, kindly contact me via telephone as I am eager to resolve this issue and want to ensure I receive any correspondence after I did not receive Nelnets purported communication.

Company response to consumer: Closed with explanation