Consumer complaint received 2023-11-04
Company: MOHELA
State: IL
Product: Student loan
Sub-product: Federal student loan servicing
Issue: Struggling to repay your loan
Sub-issue: Problem with your payment plan

Complaint:
At the end of XX/XX/XXXX I called MOHELA to update my employment status ( I was unemployed since XX/XX/XXXX and struggling to find a new job- now employed as of XX/XX/XXXX ) and to inquire about the XXXX plan before enrolling. Aligned with media, Department of Education, and Biden Administration messaging on the plan, the MOHELA agent confirmed there is 0 % interest under the XXXX plan, that I can pay more than my monthly payment without losing this benefit, and that my loans would be placed into the XXXX plan in XX/XX/XXXX. At that point, I decided to enroll/apply. The agent walked me through the online application. At XXXX point, there was an option to adjust a forbearance payment for the following month. I inquired about this and the representative said to keep it at $ XXXX and did not provide counsel regarding that it is placing my loans in a voluntary forbearance period which makes all outstanding and accrued interest in that period eligible for capitalization after 6 months even though I asked about what the forbearance amount meant. After a few weeks, I noticed my plan hadnt been switched yet and still showed my monthly payment amount pre-pandemic payment pause. I called MOHELA again to ask about this. That agent corrected me on the 0 % interest details. They stated that interest does accrue and that the government subsidy just pays the difference between my monthly payment and the monthly interest accrual amount to prevent additional interest from being applied to my balance. I acknowledge that this is an improvement to help stop runaway interest, BUT it means that anything I pay is applied to monthly accrued interest ( which is $ XXXX a month, then outstanding interest, then my principal balance ). So I am still struggling to make my payments to my student loans mean anything and as a result, Im discouraged from paying anymore than I need to pay. Furthermore, they indicated that my XXXX plan has yet to be approved and wouldnt go into effect until XXXX or XXXX ( now confirmed to go effective XXXX ). As a result, Id have an additional 2 months of interest accrued. When I mentioned what I had been told by the other agent, they could only apologize for the incorrect information I was provided. 

I also asked about how to go about updating my income once I start a new job and was told I was not required to do so as it would automatically update based on tax information in 1 year. Despite this, I plan to start making payments as soon as I can now that I have started a new job. Even though they will make impact at all. 

I sent an electronic message to MOHELA on their website asking for details on the forbearance and resulting interest capitalization I would not have agreed to had their agent communicated this to me in response to my question when I applied in XXXX. I have not heard back after a few weeks. 

During the pandemic payment freeze, I knew making payments would be an opportunity to pay down outstanding interest, but it was also a chance to increase my saving ( for a house down payment and general saving ). That savings ended up paying for part-time courses in a different field that would help increase my salary and work opportunities as well as an out of state move for a better paying opportunity at the additional high cost of longstanding ( 8 year ) relationship. I had looked into refinancing through private methods in the past, but am declined due to my income to debt ratio, even with a co-signer. 

At this point, I am forced to live with my mom as a XXXX with a XXXX XXXXXXXX with median pay for my field/position in order to make somewhat meaningful student loan payments. There is no hope of buying a home anytime in the next XXXX years ( because of savings and I refuse to pay an additional bump in my mortgage rate just because I have student loans ). No hope of marriage ( because I cant get someone else tied into my debt trap ) and no hope to ever have kids because I struggle to support myself due to the student loan debt. My student loan debt trap has literally derailed my life plans. As a student, all my mandatory debt counseling and reassurance from educated and financially savvy parents led me to believe that my student loan repayment options would be reasonable, my loans will be paid off, and I would be able to buy a house, get married, and have kids. This is far from the case.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation