Consumer complaint received 2021-12-29
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Received bad information about your loan
Company: Nelnet, Inc. (TX)

On XX/XX/XXXX, I called into NelNet to bring my account current and file an Income-Driven Repayment Plan. 

While waiting to speak with someone, the automated voice explained that the Care Act for covid relief was extended. I wondered why I didn't qualify. I had XXXX XXXX loans but I was getting calls about how my account was passed due. 

It was explained to me that my loans were not " direct '' loans and did not qualify. It was further explained to me that my loans were FFELP loan and owned by NelNet and not owned by the government. 

I shared with the representative, XXXX, that it was always my understanding that loans were direct federal loans. XXXX was the manager I spoke with after the frontline officer didn't really have a good explanation, just that my loans didn't qualify. I'm including his name because he aggressively insisted and argued with me throughout the call, even arguing about my use of the word " technicality '' as describing my loans not being qualified for these programs. 

Anyway, XXXX insisted that my loans were FFELP loans and those are commercial loans and not direct federal loans. I shared that I was always told that my loans were direct federal loans since I took them out 20 years ago. He insisted that NelNet always stated they were FFELP loans and I understood that was what was on my statements. 

However, XXXX and NelNet sent me the email to consolidate my loans with the government instead of NelNet. That email has the headline at the top... Consolidating Your Federal Direct Loans. '' If my loans were FFELP loans, why am I being communicated with in a way that clearly convolutes the technical qualifications of my actual loans? Why does it say " Direct Federal '' and not FFELP commercial loans? 

I cited the CFPB article https : //www.consumerfinance.gov/ask-cfpb/what-is-a-stafford-loan-en-549/ but NelNet said that information was incorrect and I read the specific passage to them ... '' XXXX Loans are made under the Federal Direct Loan Program . Before XX/XX/XXXX, they were also made under the Federal Family Education Loan Program ( FFELP ), though no new FFELP loans are being made now. '' This was shared to convey that it was confusing what my loans are classified as with so much conflicting and complicated information. All I wanted to know at first was why my Direct Federal Loans were not qualified for this program. Either my loans are " direct '' or not. Since they are not, why am i being left out of government assistance because my loans are part of the direct federal program but technically aren't direct because they were FFELP. 

The conversation decayed into the agent, XXXX, arguing with me that I had misused the word technicality ... which I had not. XXXX did not see my loans falling under the " Direct Federal '' XXXX program but actually being a subset or contradiction as FFELP loans. I guess I was just looking for some empathy about how confusing this was before moving to rectify the situation. 

It is my belief ( with evidence ) that NelNet and for-profit companies like it have continually and deliberately mislead and misinformed their clients ( me included ) about the qualifications for these loans. 

In an email, I am told that I am " Consolidating Your Federal Direct Loans '' 5 minutes after a representative swore up and down that NelNet never communicated that my loans were anything but FFELP despite me explaining this is the first time I ever remember even hearing FFELP or commercial when talking about my loans. I was always of the understanding that my loans were direct federal loans. 

Now, I completely understand this is an email template. I also understand that they could have an FFELP template for my categorization. This contradiction could be just a miscommunication if it weren't that NelNet profits, in part... probably large part, from the interest paid on FFELP loans and it is in their revenue and shareholder 's interest to keep my loans owned by NelNet. 

This is just one example and I have not kept good enough records to show more examples, but I expect these predatory and unethical tactics have lead to many people believing that their " federal loans '' were " federal loans '' without getting into the technical subcategories of FFELP or commercial or Direct or Indirect loans. 

The systemic convolution of the process and the categorization of these loans directly leads to increased profit from interest accrued over the life of the loans. I personally understood that my loans were federal loans and believed it didn't really matter who owned the loan when it came to government assistance. However, Congress has brought this misconception and failure to fully understand the problem to light by choosing to exclude " direct federal loans '' that aren't actually direct federal loans but FFELP commercially held loans. 

NelNet and for-profit lenders have substantial responsibility for nurturing complexity and confusion while profiting off of the interest accrued.