Consumer complaint received 2022-04-15
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Trouble with how payments are being handled
Company: EdFinancial Services (MD)

My federal student loans recently transferred from XXXX XXXX to EdFinancial. I have been fortunate to be able to keep making payments during this period of 0 % interest. This has been helpful for my financial well-being, given the large percent of my loans were assessed a 6.5-7.2 % interest rate despite being federal government loans. Frankly, that's predatory but I digress. 

While it took some time and fighting, XXXX was allocating my excess payments based on my specifications. It was very easy to go into XXXX 's system and target excess payments to my highest interest rate loans. This allowed me to only pay the minimum on the loans with a modest 3.5 % rate, but focus on the 7.2 % and 6.55 % loans. 

My loans were transferred to EdFinanical last month. This took some time and I had to make the XX/XX/2022 payment manually, which is understandable. EdFinancial had my account for XX/XX/2022 's payment set up to pay the extra {$1700.00} I had allocated when the loan was at XXXX. However, there was nothing in their online loan portal indicating how they planned to allocate this excess {$1700.00}. Knowing that these loan servicers are poorly run, I reached out through their email system. I received a response that did not answer my question - meaning, the representative did not explain how my payment would be allocated. But I was advised I could give them " special instructions '' on how to allocate the payment. I responded that my " special instructions '' were to allocate payments the exact same way XXXX had been doing prior to the transfer. 

I received no response, so today I reached out again using a live agent in EdFinancial 's chat feature. This person told me that the excess loan payment would automatically be allocated equally across all of my loans. This is the opposite of how it was with XXXX. EdFinancial claims their " system '' is not set up to let excess payments target specific loans, other than for me to go in and make manual payments where I have to check " no '' to the 7 loans I do not want to pay and then I can target a payment to the one I do want to pay extra to. 

I was then advised they could put a " special note '' in my file to allocate payments, but frankly at this point I would not trust this company to water my houseplants much less with my money. It seems safer to use my valuable time to manually make excess payments myself to a specific loan than rely on EdFinancial to do so. 

Most borrowers probably would not have done the digging I did, and would have assumed that the payments will be allocated the exact same way as their prior servicer. I only did not make this assumption because I know these servicers are overwhelmed given the servicer change alongside the upcoming reinstatement of mandatory payments. While many are not making payments now, there are borrowers who are working to pay down their loans while all payments go to principle. EdFinancial is setting their system up in a way that will lead many people to pay more in interest than they otherwise would have by ignoring payment orders it inherited from XXXX XXXX. This seems like a flagrant violation of the law surrounding unfair, deceptive, or abusive acts or practices. At minimum, EdFinancial should have communicated clearly that my excess payment would NOT be allocated exactly the same as the instructions I gave to XXXX XXXX so I would be aware of this. I should also have received proactive communication about how I COULD continue to accomplish my goal using their limited, outdated systems. Instead, all communication was generic and no notices I received would have alerted me to the fact that they would allocate my excess payments equally across all loans. 

I hope this is looked into and addressed. If nothing else, EdFinancial needs a better system if it is going to be servicing federal loans. In a world where the US government is charging rather obscene interest rates, if they can not allow borrowers to target loans based on interest rate, then they do not have the tools for the job they contracted themselves for.