Complaint sub-issue: Received bad information about your loan

My student loan servicer is XXXX XXXX. My issue began around XX/XX/XXXX when it came time for me to recertify my income based repayment ( " IBR '' ) plan. I went through the process and was approved for the IBR forXX/XX/XXXX. I was not comfortable with the monthly payment I was going to be required to pay forXX/XX/XXXX, so I reached back out to XXXX XXXX to see if there was any way to lower my monthly payment.

The representative told me to recertify and pick the option that would give me the lowest possible monthly payment. The representative also told me that she would have to put me on a one month forbearance to give my application time to process. I asked if the forbearance would have any negative impact on my loan status or repayment status, and the representative responded " No ''. She did indicate that I would have to make a one-time {$5.00} payment, which I did on XX/XX/XXXX. So I went back and recertified and followed the representative 's advice. I was approved, but when I received my new monthly payment, I realized that it was unusually lower than what I had been paying over the last 6 years. Based on that, I again contacted XXXX XXXX. It was at this time that they told me that not all of my loans would qualify for the payment plan I applied for, so I would have to go back and recertify yet again for the loan that were not eligible for the lowest possible monthly payment. The fact that not all of my loans would qualify for a particular loan repayment program was never communicated to me until after the fact. I am pointing this out because XXXX XXXX XXXX  lack of communication and failure to provide me with all relevant information is the main reason for this complaint.

Nevertheless, I go back in and recertify for the third time. I finally receive the final IBR that I am going to be on forXX/XX/XXXX sometime inXX/XX/XXXX. I made my first payment on my new IBR for XX/XX/XXXX on XX/XX/XXXX in the amount of {$880.00}. I make my next scheduled payment on XX/XX/XXXX, again in the amount of {$880.00}.

Then comes today, XX/XX/XXXX I log in to my account and am proceeding to make my next scheduled payment when I noticed the issue. On XX/XX/XXXX, my principal balance increased by approximately {$37000.00}! I was shocked. I didn't know how that could have happened, so I immediately called XXXX XXXX. I spoke to four different people during the 50 minute call ; XXXX, XXXX, XXXX, and XXXX. They all told me the same thing : when I changed my Income Based Repayment Plan, the interest on my loans was capitalized and added to the principal balance. I could not believe what I was hearing. I told all them repeatedly, I was never told that was even a possibility. Not once during any of the calls between XX/XX/XXXX and XX/XX/XXXX was I ever told that if I choose to change my repayment plan that all interest would be capitalized. Had I known that was a possibility, then I would have never changed my repayment plan!!!

Nobody at XXXX XXXX cared, nor did they offer any relief. All they kept saying was that it was in the Terms and Conditions of the repayment plan and in the promissory note. Now let me put you in my shoes : My principal loan balance before XX/XX/XXXX was {$160000.00}. I had never missed a payment or even been late on a payment in the 6 years that I have been repaying my loans. I knew that I would never fully repay the loans, so my plan was to pay on them for 25 years and then apply for forgiveness. I was okay with that plan. Now fast forward to today, my principal balance is now {$200000.00}! Why you ask? Because the interest on my loans was capitalized when I changed my repayment plans. Was the fact that the interest on my loans would be capitalized if I changed repayment plans ever communicated to me once during the multiple phone calls with XXXX XXXX between XX/XX/XXXX andXX/XX/XXXX? NO! Not once was that ever communicated to me. Again, had it been communicated to me, I WOULD HAVE NEVER CHOSEN TO CHANGE MY REPAYMENT PLAN.

Not only has this violation resulted in an increase of my principal balance, it also has a direct effect on my overall Debt-to-Income ( " DTI '' ) ratio. I have other bills, specifically my mortgage. Thanks to Fedloan Servicing 's lack of communication, I don't know if I'll be able to refinance my mortgage now.

Under the Dodd-Frank Act, all covered persons or service providers are legally required to refrain from committing unfair, deceptive, or abusive acts or practices. It's my contention that XXXX XXXX has violated Dodd-Frank by committing an act that is unfair and deceptive.

An act or practice is unfair when : ( 1 ) It causes or is likely to cause substantial injury to consumers ; ( 2 ) The injury is not reasonably avoidable by consumers ; and ( 3 ) The injury is not outweighed by countervailing benefits to consumers or to competition. A substantial injury typically takes the form of monetary harm, such as fees or costs paid by consumers because of the unfair act or practice. Here, the act was capitalizing the interest on my loans without ever telling me that it was a possibility. Let 's apply that to the test above : ( 1 ) I have suffered a substantial injury because my principal balance and overall DTI increased by approximately {$38000.00} ; ( 2 ) I could not have avoided it because I was never told of the possibility that my interest would be capitalized if I changed repayment plans ; and ( 3 ) I received no benefit from my interest being capitalized.

Now to the deceptive test. An act or practice is deceptive when : ( 1 ) The act or practice misleads or is likely to mislead the consumer ; ( 2 ) The consumers interpretation is reasonable under the circumstances ; and ( 3 ) The misleading act or practice is material. To determine whether an act or practice has actually misled or is likely to mislead a consumer, the totality of the circumstances is considered. Deceptive acts or practices can take the form of a representation or omission. Applying that test to the issue that I was never told that my interest would be capitalized if I changed repayment plans : ( 1 ) XXXX XXXX never told me the interest would be capitalized if I changed repayment plans. Had they told me, I would have chosen not to change plans ; ( 2 ) I asked multiple times during multiple calls if there would be any negative effects of changing plans and XXXX XXXX always responded that there would not be any negative effects, and also I was never told the interest would be capitalized and a reasonable person would need to know that information ; and ( 3 ) XXXX XXXX XXXX deceptive act is material because it has caused an increase to my principal balance by approximately {$38000.00}.

Based on the above, I believe XXXX XXXX   has violated the Dodd-Frank Act by committing an act that was both unfair and deceptive.