Consumer complaint received 2020-03-18
Company: Nelnet, Inc.
State: IN
Product: Student loan
Sub-product: Federal student loan servicing
Issue: Dealing with your lender or servicer
Sub-issue: Don't agree with the fees charged

Complaint:
Received Nelnet Monthly Statement in XXXX detailing XXXX interest charges. 
NELNET, Nelnet.com, XXXX XXXX XXXX, XXXX, NE  XXXX, XXXX, XXXX   The interest charged on XXXX statement was {$260.00}. The daily interest rate is 0.02739726 % ( 10 % APR ). This rate was applied to an approximate balance of {$23000.00}. The daily interest rate equals approximately {$6.00} ( as indicated on the XXXX statement ). When multiplying the daily interest rate of {$6.00} by 31 days ( 31 days in XXXX ) the maximum amount of interest that could be charged based on the balance due, would be {$200.00}. This is the approximate amount I have been charged in past months, based on the payment schedule I have with Nelnet. 

The amount of interest charged as indicated on the XXXX statement : {$260.00} ; minus {$200.00} ( normal interest charge at $ XXXX/day ) equals {$66.00} more interest than the annual interest rate supports. 

I contacted Nelnet on three occasions, once by phone ( evening of XX/XX/20 ) and twice by email ( XX/XX/20 and XX/XX/20 ). In a lengthy conversation, the representative put me on hold several times as she consulted with her manager to help resolve this issue. When Nelnet could not resolve it, Nelnet indicated they would send me detail regarding the interest charges, to my email. Nelnet has not provided the detail. When Nelnet replied to my email inquiries, Nelnet gave me the formula to calculate the interest, however, using their formula, it does not support the amount of interest I have been charged. 
When dividing the amount of interest charged in XXXX ( {$260.00} ) by 31 days ( XXXX interest charges ) this equals $ XXXX/da, $ XXXX/day more than what the statement indicates the daily interest should be ( $ XXXX/day ). 

I am unable to receive a direct response from Nelnet which will look in to this specific occurrence, as Nelnet continues to give canned responses to the apparent interest overcharge. In addition to the overcharge, I reduced my balance due during the month of XXXX and XXXX to the current amount of {$2800.00} ( a balance reduction of {$21000.00} ) which would tend to indicate an interest cost reduction, however, the interest charges increased as my balance decreased. The interest overcharge is easily understood by looking at the XXXX statement and noting the considerable reduction to my balance due. The interest charges should have been reduced rather than increasing approximately 33 %. 

Nelnets interest calculation response : The interest on your student loan ( s ) is calculated using the daily simple interest method. Your interest accrues at a daily rate based on the principal balance and interest rate of your loan ( s ) .To  calculate how much interest has accrued on your account since your last payment or since the interest was last satisfied, do the following : 1 ) Multiply the principal balance by the interest rate ( i.e. {$10000.00} x .08 = {$800.00} ) 2 ) Divide this amount by XXXX, which is the number of days per year ( i.e. {$800.00} / XXXX = {$2.00} ) 3 ) Multiply the daily rate by the number of days since your last payment or since the interest was last satisfied ( i.e. {$2.00} x 5 = {$10.00} ) 4 ) This is the amount of interest that has accrued on your account. 

Please note that when a payment is received it is first applied to any fees ( if applicable ), then to accrued interest and finally to principal. Since your interest accrues at a daily rate based on your principal and interest rate, we are unable to provide you with an amortization schedule. Please refer to your repayment schedule for detailed information regarding your repayment term. 

Please be aware, if your account is on an Income Driven Repayment plan your payment will be applied to accrued interest first, then fees ( if applicable ), and then to principal.

Company response to consumer: Closed with explanation