Consumer complaint received 2016-06-23
Product: Student loan — Federal student loan servicing
Issue: Dealing with my lender or servicer — Trouble with how payments are handled
Company: Navient Solutions, LLC. (FL)

When my repayment obligation began after graduating, I selected a graduated repayment plan offered to me by my student loan servicer, Navient. In addition to the graduated repayment plan, I was offered a reduced interest rate on my loans if I agreed to make my payments via auto-debit each month. I agreed to this feature to take advantage of the advantageous interest rate. Since the repayment period began, all payments have been made on time. 

I recently paid submitted an electronic payment in addition to my monthly auto-debited payment, which was applied toward the principal balance of one of my outstanding loans. Due to this surplus payment, that loan was paid in full. At the time I made the payment, I was permitted to select whether I wished to have my due date advanced. The options presented to me were inapplicable because I paid the loan in full. As such, I called Navient and requested to have my future payments allocated in a particular manner. I was informed that I was not permitted to allocate my payments as I wished and that payments would be allocated according to Navient 's policy, which had the effect of applying future surplus payments to the principal balance of all my loans, pro rata, rather than to the principal balance of the highest interest loan, as I requested. A supervisor confirmed this to me. 

Shortly thereafter, I sent a letter to Navient via fax and U.S. Mail explaining, in detail, how I wished for my payments to be applied. Rather than acknowledging my correspondence, Navient provided me with a form letter setting forth its repayment policies, which is entirely unresponsive to my inquiry. As such, I followed up with a second letter, sent to Navient via fax and U.S. Mail, again requesting that my payments be applied in a particular manner. This letter has gone unanswered, and as of my most recent payment, Navient as has failed to allocate my payments as directed. 

Despite requesting written confirmation of whether my payment allocation request could be accommodated, I have not received any communication from Navient. I have reviewed all relevant promissory notes, and believe that I am permitted to make excess payments on any loan of my choosing, and so long as my loans are current-which they are-I am permitted to apply such surplus funds as I wish. I have not located any Navient policy that would supersede the terms of the promissory notes, nor have I found any federal regulation permitting Navient to dictate the manner in which I may pay off my debt obligations. 

That said, I suspect that part of the issue may be due to the auto-debit feature I enrolled in when my re-payment obligation commenced. As noted above, I agreed to auto-debit payments to take advantage of the interest rate reduction I was promised for doing so. When presented with the offer, it was not adequately disclosed that enrolling in auto-debit would prevent me from directing how payments, which were made in addition to my monthly minimum payment, can be allocated to my several loans. 

If this is indeed the reason for Navient 's noncompliance with my request, it is a borderline deceptive practice. Borrowers are induced to enter the auto-debit program with the promise of a minuscule interest rate reduction. Auto-debit also reduces the cost of postage, as well as the time and effort needed to manually submit a payment each month. In my case, the promised interest rate reduction will actually increase the amount of my total repayment obligation, because Navient 's practices are preventing me from making additional payments to the principle balance of certain loans. 

Auto-debit is a feature offered by nearly every financial institution today, and the feature is typically offered without limitations or caveats. Borrowers should be permitted to specify the amount and allocation of their auto-debited payments.