Consumer complaint received 2016-05-31
Company: Utah System of Higher Education
State: PA
Product: Student loan
Sub-product: Federal student loan servicing
Issue: Dealing with my lender or servicer
Sub-issue: Trouble with how payments are handled

Complaint:
My loans were recently transferred from XXXX to XXXX. I was having extra money automatically withdrawn from my account to pay extra towards my loans. XXXX let me select a specific higher interest loan to automatically apply the extra payment to. When my loans were transferred to XXXX, XXXX did not automatically withdrawal the extra amount from my account and in fact did not apply any payment toward the principal of the loan I was making extra payments on. The payment that should have been made to the loan I was paying extra toward was split among my other lower interest loans. 

I spoke with customer service with XXXX and they told me that their automatic payment system can not apply an extra amount to a specific loan. One customer service representative even said that they could not predict how my payment would be split among my loans each month. Obviously this comment was very concerning. They informed me that I could go in and make a manual extra payment on a specific loan each month. However, making a manual extra payment on a loan places the loan in paid ahead status. When the loan is in paid ahead status none of my automatic monthly payment would be applied to the principal of the loan in paid ahead status, but rather it would be split among my other loans. To me, this system makes no sense. My intent is to pay extra toward a specific higher interest loan to pay it off faster. I do n't want the portion of my normal automatic monthly payment that was supposed to go to that loan to be split among my other loans. 

I asked to speak with a supervisor at XXXX and he informed me that they could go in and manually adjust my payment each month so that an extra payment would be applied to the loan I specified. Apparently, there is no other way to pay extra toward a specific loan without messing up how my automatic monthly payment is divided among my loans. I asked to receive a written confirmation that they would be making this manual adjustment each month and received an e-mail with said written confirmation. However, this month they withdrew the extra amount from my account as requested, but did not apply the extra payment to the loan I specified. It is not clear whether a manual adjustment was made or not since it is not clear how their system even handles automatic payments. Regardless, my payment was not applied as I requested and as they confirmed in writing. I e-mailed XXXX requesting that they correct the problem, but it has been 6 days and they have not corrected the problem or responded to my e-mail. 

It was a simple matter to automatically pay extra toward a loan with XXXX. I did not ask for my loans to be transferred from XXXX to XXXX. XXXX needs to provide the same level of service. 

Additionally, when my loans were being transferred from XXXX to XXXX, there was a period where my interest rate deductions were not applied. That is, for a few weeks my loans accrued daily interest at a higher rate than they should have. XXXX informed me that I was not the only person with this issue and assured me they would go back and correct the problem, but it appears they have not done so yet.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation