Consumer complaint received 2018-06-28
Company: Nelnet, Inc.
State: WI
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 have several loans in IBR which are serviced by NelNet. After my most recent re-certification, they began overcharging one of my accounts. My account number with NelNet is XXXX and the loan at issue is designated Group D. My standard 10-year payment is {$180.00} and they are requiring I pay under the IBR program {$180.00} per month. It is my understanding based on the language of Fed. Code Sec. 682.215 ( D ) ( 1 ) ( i ) as well as all of the materials put out by the Department of Education that my payment would not be higher than the standard 10-year payment based on when I  entered the IBR program. An example of this information is in the FAQ about IBR put out by the Department of Education, the link to which is : https : //studentaid.ed.govXXXX When I contact NelNet, they claim that the 10-year standard payment changes every year, based upon how many payments are left under your original 10 year plan. On their web page they describe it as : " If you choose not to provide us with your current income information each year, or we determine that your current income makes you ineligible for a reduced payment amount, you will remain on your income-drive ( sic ) repayment plan, and your payment amount will be adjusted TO ENSURE YOUR STUDENT LOANS WILL BE PAID OF BY THE END OF YOUR REMAINING TERM. '' ( Caps inserted ). 

This does not comport with the Department of Education information or the statute. Note, on the page 4 table it describes the payment cap under IBR ro be " never more than WHAT YOU WOULD HAVE PAID under the Standard Repayment Plan with a 10-year repayment period, BASED ON WHAT YOU OWED WHEN YOU ENTERED THE IBR PLAN. '' ( Caps Provided ). In addition, Question 16 at page 20 states when you are no longer eligible for IBR due to income, you will be required to pay the 10-year standard payment based on the loan amount when you first entered IBR.

NelNet 's interpretation runs counter to the law and various materials put out about IBR and would also lead to absurd results, as well as effectively gutting the " cap '' on payments. For instance, if you made 100 out of 120 IBR payments and had a balance remaining of {$100000.00}, NelNet would calculate the monthly payment as {$5000.00} ( {$100000.00} / 20months ). Under NelNets interpretation not only do the payments become prohibitive once your income renders you ineligible, it also effectively takes the position that an IBR loan repayment may never extend beyond the original 10 year term. For a program that offers forgiveness of loans after 25 years, this is clearly not a workable situation.

Their interpretation becomes more absurd if you lose eligibility after the original 10 year term. Multiple persons at NelNet indicated that if you lose eligibility at payment 120, then payment 121 would be the full amount of the loan balance. This is clearly not the intent or language of the IBR regulations.

I am especially concerned that these statements are often coupled with a pitch to have the borrower switch out of IBR into a different payment scheme. What is also concerning is that their webpage broadcasts the erroneous interpretation as their position. I believe this interpretation is willful and is solely intended to scare IBR borrowers to leave the program into a different, higher, payment scheme.

I am not so concerned at this time that my Group D payment is approximately {$1.00} more a month than it should be, however I am concerned that their total lack of recognition of the IBR cap will lead to future, more severe problems in the future. 

Thank you, XXXX XXXX

Company response to consumer: Closed with explanation