Consumer complaint received 2024-05-29
Product: Payday loan, title loan, personal loan, or advance loan — Installment loan
Issue: Getting the loan — 
Company: PENTAGON FEDERAL CREDIT UNION (NE)

Hello CFPB, I attended The XXXX XXXX XXXX, which recently came to a settlement of misleading students in the SXXXX XXXX XXXX  ( formally XXXX XXXX XXXX ) case. When I attended The XXXX XXXX XXXX, I, among many other students, had been given false information about employment partnerships, salaries and placements. With those marketing tactics I was driven to obtain XXXXederal loans to attend The XXXX XXXX XXXX. Tuition became so expensive that I ran out of Federal Funding and was required to obtain private student loans at a variable interest rate in order to complete my XXXX XXXX. I was given the same 6-month grace period post-graduation to where my loans would not become in an active repayment status or adjust to WSP. However, mid-way through my XXXX journey I became ill and was forced to take a 6-month medical leave. I was diagnosed with XXXX XXXX and had to have my left XXXX removed. During this time away from school my private loans were switched to an active repayment status and started to bill payments. As well as adjust to WSP. During my recovery I was unable to work. When I was cleared to return to school I was ordered to only work part-time. Once I discovered that I was being billed for my private loans I reached out to my servicer, XXXX XXXX XXXX, to discuss my situation. I offered to provide medical documents to prove my situation and to get XXXX to contact the lender to discuss reverting my private loans back to a no-payment status. This was unsuccessful. The original principal balance of this loan was approximately {$25000.00} set to a variable rate of 6.5 %, with an approximate margin of 2 % above WSP. Since I was unable to make full payments, I continued to be placed into a forbearance period. These were the only options provided to me and were done without consultation or investigation to my situation. Over the years I eventually graduated and was unable to land any job in my field of study. In turn, jobs I could obtain were not anywhere near the income needed to support the payments of both private and federal loans ( totaling {$110000.00} ). As time moved on my private loan interest rate shot to 13 % and because of my hard work a dedication to repairing a diminished credit score ( due to missed payments from these loans ) I was finally able to refinance my private loan away from XXXX. This loan was finally refinanced at Pen Fed Credit Union at a NEW principal balance of {$54000.00}. My private loan was dragged through so many forbearance programs, capitalizing interest, and rate changes that my principal balance doubled the original borrowed amount. My complaint is it is absurd that any loan affiliated with The AI of Colorado should be active. Private or not, the for-profit school took advantage of thousands of students by capitalizing off false claims. I am hoping to see that the route of private loans falls the same course of Federal Loans. I thank you for your time. Sincerely, XXXX XXXX XXXX Response The Office of Consumer Advocacy ( OCA ) at the Pennsylvania XXXX XXXX Assistance XXXX ( PHEAA ) received your recent correspondence through the Consumer Financial Protection Bureau ( CFPB ) portal regarding the status of your student loan account serviced by XXXX XXXX XXXX ( XXXX ). Please Note : XXXX conducts its student loan servicing operations nationally as XXXX. We understand from your inquiry that you attended the XXXX XXXX XXXX Colorado and are asking that the loan debt you obtained for the school be discharged and refunded any amounts paid toward the debt. We also understand that you had to leave school for a period of time because of medical issues and your loans entered repayment and had asked XXXX to contact the lender to revert the loans back to a no-payment status, but this was unsuccessful. You also expressed concern that the original principal balance of the loan was around {$25000.00} and the variable interest rate was 6.5 % with an approximate margin of 2 %. However, you stated the interest rate went up to 13 % by the time you refinanced your and the principal balance of your new loan was {$54000.00}. You are asking that all private loans for the XXXX XXXX be discharged and all amounts paid be refunded. XXXX previously serviced your private loan that was disbursed on XX/XX/XXXX on behalf of the owner, XXXX. As a result of late payment, the loan owned by XXXX charged off effective XX/XX/XXXX, XXXX XXXX XXXX serviced your private loan that was disbursed on and XX/XX/XXXX no behalf of the owner, XXXX XXXX XXXX Effective XX/XX/XXXX, the loan owned by XXXX XXXX was paid in full through a refinance company. Attached to this response is a copy of the respective loan agreements you signed, and a financial activity summary for each loan while it was serviced by XXXX. Based on the details you provided in the CFPB inquiry, you are referencing the loan that was owned by XXXX XXXX. The loan agreement you signed in XX/XX/XXXX listed the XXXX XXXX Requested as {$20000.00} and an interest rate of 11.230 %. Please note that the interest rate for the loan changes quarterly each year on XX/XX/XXXX, XX/XX/XXXX, XX/XX/XXXX, and XX/XX/XXXX. When this loan was disbursed, the original principal balance was {$21000.00} ( inclusive of {$1200.00} in origination fees ) and the interest rate was 11.290 % ( slightly higher on than what was listed on the application because the variable rate changed on XX/XX/XXXX ). It is important to know that interest on the loan accrued daily from the date it was disbursed until the date it was refinanced. When payments are received, they are applied toward outstanding interest and any applicable fees first, with any remaining amount applied toward the principal balance. A review of your account determined that the payments you remitted to XXXX were under reduced payment plans, which were not high enough to satisfy the interest accrual in a XXXX period. As a result, there was little to no change to the principal balance of your loan. Even when the installment increased to {$670.00}, and you made payments of this amount on XX/XX/XXXX and XX/XX/XXXX, but the payments were applied only toward the outstanding interest on the account. When the refinance payment was applied with an effective date of XX/XX/XXXX, the payment satisfied {$54000.00} in principal and {$1500.00} in outstanding interest, for a total payment of {$56000.00}. The review of your account also determined that you used approximately 50 months of deferment and forbearances on the loan. After periods of deferment and forbearance end, any outstanding interest is capitalized ( added to the principal balance. On the attached financial activity summary, instances of capitalized interest are shows as XXXX XXXX. Based on our review of the financial activity summary and your usage of reduced payment plans, deferment and forbearances, the balance of your loan when it was refinanced was accurate. Because XXXX no longer services your loans, its office can not assist you with your requests for loan discharge and being refunded for amounts paid. We encourage you to contact he current servicer of your refinanced loan to inquire if you can take advantage of any loan discharge programs based on the original funds being used for the XXXX XXXX XXXX XXXX. For information regarding the status of your account, you may access your account online at XXXX or via the XXXX XXXX XXXX. If you have any additional questions or concerns, please contact XXXX at XXXX. Customer Service Representatives are available Monday through Friday from XXXX XXXX XXXX XXXX XXXX., XXXX.