Consumer complaint received 2017-02-08
Company: AES/PHEAA
State: NJ
Product: Student loan
Sub-product: Federal student loan servicing
Issue: Dealing with my lender or servicer
Sub-issue: Received bad information about my loan

Complaint:
Summary : I was provided false or misleading information which caused the accrued interest on my loan to capitalize and potentially raise my payments from $ XXXX to $ XXXX. 

Background : I am seeking a mortgage to refinance my home. My mortgage broker told me that due to the recent change in mortgage laws, I was required to get a letter from my student loan provider ( Pennsylvania Higher Education Assistance Agency d/b/a Fedloan Servicing ), which reflected a " fully amortized '' monthly payment amount. I have always been on Income Based Repayment until XXXX XXXX. My wife and I had a baby in XXXX of XXXX, and since XXXX of XXXX I entered into forbearance in order to pay the medical bills associated with my son 's birth. I was in forbearance during the time I first contacted Fedloan Servicing. 

Interactions : I contacted, via phone, Fedloan Servicing on XXXX XXXX, XXXX. I asked for a letter reflecting what the " fully amortized '' payment amount would be. I was told they could not provide me with a letter stating a " fully amortized '' payment amount because I was on forbearance. I would need to leave forbearance and enter a standard repayment plan XXXX to receive a letter for my mortgage company. 

I asked what switching to 25 year XXXX would entail. At no time was I informed that the accrued interest on my loans would capitalize. I told the customer service representative ( CSR ) that I would research the 25 year XXXX, and call back. The Fedloan Servicing website does not mention anything about accrued interest capitalizing, at all, for any plan. Neither does the StudentLoan.gov website mention accrued interest capitalization upon going on to the25 year XXXX. The CSR walked me through the Repayment Estimator for the 25 Year XXXX, and they ran it separately from me, and we both came up with {$1200.00}. 

I called back on XXXX XXXX, XXXX, after reviewing my options, and asked to be placed in the 25 Year XXXX. They CSR told me I would need to make a payment to switch over to the new plan. I agreed on {$500.00}, and was told to wait XXXX to 10 business days for a bill to be generated and sent to me. Once paid I would be on the new 25 year standard repayment plan. 

I called back on XXXX XXXX, XXXX to get an update after looking at my online account and seeing Fedloan Servicing had capitalized my accrued interest. I was told that because the plan switched from IBR to Standard the accrued interest capitalizes. I asked why I was not told this prior to switching. They said, " Sorry, but that is what happens when you switch from IBR to Standard. There was nothing they could do about it, even though I had not paid the {$500.00} to " activate '' the plan, once the interest is capitalized they will never revert it back to accrued interest status. '' Additionally, they also told me my new monthly bill would now be $ XXXX/mo due to the capitalization, not the {$1200.00} which I was previously quoted. My loan went from a principle balance of {$170000.00} to now being {$210000.00}. And again, there is nothing I can do about it now, but if the payment is too high, I could look at going back to an Income Based Repayment Plan.I told them I would call them back. 

I called back on XXXX XXXX, XXXX after receiving some new electronic correspondence from Fedloan Servicing. The new letter stated my monthly repayment amount, under the XXXX, would be approximately $ XXXX. The CSR told me that the monthly payment was so high because my loans, which I asked to be transferred to a 25 year XXXX, were actually put on a XXXX or 78 month repayment schedule because that was the remaining period on the current loans. They told me I would now need to consolidate my loans to enter the 25 year repayment plan. Or, go back on IBR. My old IBR payments were calculated at $ XXXX, now they are at $ XXXX due to the capitalization of interest. 

I feel like I was lied to and swindled.

Company response to consumer: Closed with explanation