Consumer complaint received 2019-04-28
Company: Nelnet, Inc.
State: TN
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 writing to ask for help in resolving an issue I've had with Nelnet to rectify a problem with my student loan that was the result of years of bad and misleading advice provided by your customer service agents -- an issue that resulted in well over {$50000.00} in interest added to my account, and one that will continue to cost me tens of thousands of dollars over the next two decades. 

I graduated from my doctoral program at XXXX University in XX/XX/XXXX with {$200000.00} in Stafford loans ( in addition to loans from an earlier XXXX XXXX ). My grace period for these loans ended on XX/XX/XXXX. 

For the first three and a half years after graduating, when I was just starting out in my career and making only a modest entry-level salary, I did not have the means to meet the daunting monthly payment on my loans. When I expressed that concern to Nelnet customer service agents, time and time again they advised me to seek a forbearance for my loans instead of entering into an income-based repayment program that would have resulted in a payment of nothing or next to nothing. 

Even when I inquired about Federal repayment programs, I was repeatedly advised by Nelnet customer service representatives that a forbearance was the easiest and best avenue for me to pursue, despite the fact that an income-based program would have offered a manageable monthly payment and prevented interest from capitalizing. Im only now writing after reading about the various lawsuits against student loan servicers like XXXX -- lawsuits that motivated me to research my own loans and realize the steep price I paid for following Nelnets misleading advice for years. 

From my records and recollection, it appears I finally entered the IBR program after consolidating my loans on XX/XX/XXXX after a close friend insisted I look into the option. By the time I did, my {$200000.00} balance had swelled to {$250000.00} -- resulting in an additional {$51000.00} in interest that would not have been capitalized had I entered into the IBR program when my grace period first ended in early XXXX. 

But the additional {$51000.00} in capitalized interest is not the only financial penalty I have paid by following Nelnets bad advice. Had my principle been locked at {$200000.00}, I would only be accumulating {$12000.00} per year in interest on my debt. Instead that loan is accruing {$15000.00} per year -- an additional {$3000.00}. Assuming Im not able to pay off my loans sooner, over the course of the 25-year IBR   period, thats an additional {$76000.00} that my loan will accumulate in interest due to the inflated principle. And if Im still paying off my loans at the end of the 25-year IBR  period and the balance is forgiven, I will have to pay taxes on that additional {$76000.00}. 

To add insult to injury, if I had not listened to Nelnets customer service agents and pursued an IBR strategy earlier, I would already be over 8 years into my 25-year IBR repayment period instead of just four -- four additional years during which that {$51000.00} added {$12000.00} more in interest ( {$51000.00} x 6 % each year for 4 years ). 

While these amounts may seem small compared to my overall balance, the increased balance represents money that I will not be able to put toward my XXXXyear-old XXXX college fund, and a hefty additional tax I will have to pay when the balance is forgiven. Those additional four years mean that I may be repaying my loans until Im XXXX instead of XXXX, cutting into my ability to support myself in retirement. 

As a result I have sent a similar letter as this to Nelnet asking them to investigate this matter and un-capitalize the {$51000.00} in interest that accumulated during those four years that their customer service representatives steered me away from IBR and towards forbearance. I also asked them to reduce my overall interest by {$12000.00} -- the amount that the excess principle cost me in the years since I entered IBR. Additionally, I asked that four years be credited to my repayment period. I would happily furnish tax returns and make a lump-sum payment equal to the IBR amount I would have paid from XXXX, when my salary was modest and payments would have been minimal. 

You may ask why I didnt push back more or educate myself more on these programs back in XXXX, when my grace period ended and I first had to begin repaying my loans. Like many graduates, I was occupied with board exams, finding a job, and relocating to a new town for work. In addition to all that stress, I was also going through what was undoubtedly the worst year of my life. My final year in graduate school, my wife and I divorced. She remarried shortly after and moved with our infant son, the joy and brightest light in my life, 600 miles away from the city where Id found work and where we were supposed to raise him together. Forced to choose between moving closer to them, where Id be unemployed ( I was unable to find work in their town ) or staying where I was so that I could fulfill my financial obligations as a father, I chose the latter. For 2 years, 4 months Id drive 20 hours round-trip to see my son once a month while working and saving enough money to move closer to them and open a practice of my own. When I was finally able to move to their state in XXXX, I had to start building a practice from scratch, from the ground up. Im proud that Ive been able to make monthly payments on my student loans for years now, even if the near- {$600.00} payment isnt even covering interest. By reducing my principle to what it should be -- $ {$200000.00} -- the idea of increasing my monthly payment to a point where Im covering the monthly interest and starting to dig into the principle actually seems like a possibility instead of a pipe dream. 

I am very grateful for the Federal student loan programs like IBR and student loan servicers like Nelnet who make them possible ; without them my student loan debt would simply be untenable. I want to repay my student loans like a responsible citizen and have been making payments steadily as my income has increased over the past four years. I am, however, hamstrung by early errors and bad advice furnished by Nelnet customer service agents and ask that this injustice be rectified. 

Sincerely, XXXX XXXX XXXX

Company response to consumer: Closed with explanation