Consumer complaint received 2016-08-02
Company: GREAT LAKES
State: CO
Product: Student loan
Sub-product: Non-federal student loan
Issue: Dealing with my lender or servicer
Sub-issue: Trouble with how payments are handled

Complaint:
Great Lakes Loan is serving a private student loan I took out with XXXX. There are XXXX separate loans identified by " token '' numbers. There is XXXX token that has a higher interest rate than the other XXXX ( # XXXX ). In an effort to pay off the loan with the highest interest rate faster, I have been making extra payments. On the Great Lakes website, it states that my extra payment will be allocated to the loan with the highest interest rate ( after deducting any late fees, and interest on the other loan tokens ). Additionally, my statements indicate I may contact Great Lakes and allocate payments a particular way. Contrary to their representations, AND MY SPECIFIC INSTRUCTIONS, Great Lakes is not applying my extra payments in this fashion. Please see my loan payment history for the last 12 months. I made extra payments in the months of XXXX 2016, XXXX 2016, XXXX 2016, and XXXX 2016. Only the XXXX and XXXX 2016 extra payments were allocated correctly - ie. being allocated to the loan with the highest interest rate. 

I attempted to pay off the loan with the highest interest rate ( Token XXXX ) on XXXX XXXX via phone. I was instructed to contact Great Lakes for payoff instructions. I had the payoff amount ready to go - {$1000.00}. I was informed by the representative that my payment would not be allocated to token XXXX because part of it would be used to make my " monthly payment ''. After informing the representative that I had already made my monthly {$250.00} payment on XXXX XXXX, the representative informed me that my " billing cycle '' had changed, and that because I was in a new billing cycle, my {$1000.00} payment would first be applied to my XXXX monthly payment. I complained and spoke with Account Manager XXXX. I do not have XXXX 's last name. She confirmed what the representative had stated. When I brought to her attention that my extra monthly payments in XXXX and XXXX were allocated in the way I described, she informed me that Great Lakes made a change to the billing cycle on XXXX XXXX, 2016. Note : I DID NOT AUTHORIZE A CHANGE TO THE BILLING CYCLE. Additionally, I was not notified of such a change - a point confirmed by XXXX. I subsequently made an online payment on XXXX XXXX for {$1000.00} to payoff XXXX # XXXX. It was not allocated to pay off the loan. 

By unilaterally changing the billing cycle to where my payment is now due at the " end '' of the billing cycle as opposed to the " beginning '' of the billing cycle, Great Lakes has instituted a scheme to receive excess interest payments. Rather than extra payments being applied to the loan with the highest interest rate, Great Lakes has effectively " inserted '' an extra monthly payment which the loans need to be allocated toward first - thereby reducing the amount of money being applied to the loan with the highest interest rate. This results in extra interest being paid by the borrower. 

Not only do I believe this scheme constitutes fraud, but I believe it violates the terms of my promissory note. As of this writing, Great Lakes has not provided me a copy of the promissory note, despite repeated attempts to do so. Please note, XXXX indicated that I would need to contact Great Lakes for the promissory note. It can not possibly be true that the loan servicer can unilaterally determine what my " billing cycle '' is and then arbitrarily change it on a whim - without notice to me, or a description of the ramifications. 

I work as a XXXX for the XXXX. When we uncover schemes to manipulate customers to pay more money, we assess HEAVY sanctions against the perpetrators. I believe this arbitrary change in the " billing cycle '' violates the terms in my promissory note, and constitutes a fraudulent scheme developed by Great Lakes Loan whereby borrowers pay extra interest rather than allocating extra loan payments in the most efficient way possible.

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