Consumer complaint received 2021-11-12
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Received bad information about your loan
Company: AES/PHEAA (MI)

To whom it may concern : I am writing to notify you about the fraudulent business practices I have experienced from FedLoan Servicing, a federal loan servicing company based in Pennsylvania. 

Since transferring my student loans to them in XXXX of XXXX, I received negligent loan advice from Fed Loan Servicing representatives resulting in interest capitalization of over XXXX added to my account in a two month period ( XXXX XXXX ). There was no disclosure or warning that this would happen despite my best efforts to get the correct information and accurate guidance on loan repayment after the transfer. 

Shortly after transferring to Fed Loan Servicing I noticed their shady business practices. There was no communication from them that they had received my loan transfer or how to make payments. In XX/XX/XXXX I reached out to them to see what the hold up was. I was NOT notified that I needed to renew my Income Driven Repayment Plan ( something my prior loan company did every year ). They informed me in XXXX when I called that since they hadn't received my IDR, it was too late and I would need to make the non-IDR full payment ( around {$3000.00} ) or else go into forbearance. I submitted my IDR request to them immediately and made a payment based on the prior payment rate I'd been making at my other lender ( prior to transfer ). I told them I was a single mother in the midst of a custody battle on a medical resident salary and could not make a {$3000.00} payment on such short notice. They said I could have a loan deferment for that month and it wouldn't increase my loan or add any additional charges. In XX/XX/XXXX, I noticed that {$24000.00} interest capitalization was added to my account. I was very upset and talked with three different customer service representatives during that month, each giving different advice : one said to make a non-IDR {$3000.00} payment, one said to keep making the payments based off my prior IDR, and one said to not make a payment at all because my IDR was being uploaded/processed by Fedloan and I would be getting an updated bill to pay the IDR calculated amount. When I asked what happens if it takes longer than the month, she said to not worry about it - that I wouldn't be charged anything because my documentation had already been submitted so there was nothing more needed on my end. She reassured me I would NOT be charged for anymore interest capitalization. Unfortunately, I listened to this Fed Loan Servicer customer rep 's advice and didn't make a payment in XX/XX/XXXX. 

In XX/XX/XXXX, I saw another {$20000.00} in interest capitalization had been added to my account. I called and the customer service rep stated this was all my fault, I was never told the incorrect information, and there was no way to rectify the situation. She told me it was going to be forgiven anyway, so why did I care? I couldn't believe it. In less than 3 months I had been with FedLoan Servicing, my {$260000.00} loans were now increased over XXXX! 

The reactions, attitudes, and negligent advice of customer service representatives since transferring my loans to them has me highly suspicious of financial fraud. Over the years many of the reps have indicated that the government will pay off these expensive errors once I qualify for forgiveness. As part of the Public Service Loan Forgiveness program, this appears to be a an abuse of government funds to pay for expensive errors made under false information and loan guidance given by their egregious reps. 

Additionally, FedLoan Servicing appears to have honesty problems regarding their counting of payments towards the forgiveness program. At least 4 months of payments I have made over the past 7 years ( four of which were with my prior loan servicer ) are categorized as " non-qualifying payments. '' When I have asked reps why they didn't count, nobody can give me an answer that makes sense. Some reps have stated I didn't make the payments at all those months, which is false ( I have proof from my prior loan servicer and my bank account statements ). When I point this out they say they'll open a review. The review process always takes 6+ months ( which reps say is normal ) and has always resulted with a letter saying the review is closed and all the account information is accurate. Nothing changes no matter how many times I call them or how many times they do a " review. '' Steps I have taken to try to resolve this issue : 1 ) Requesting for the recorded calls with the reps from XXXX XXXX to be reviewed so that I can prove I was given was incorrect/negligent advice from them and as a result ended up with {$45000.00} of interest capitalization over 2 months. This has been repeatedly ignored or told " it isn't possible. '' My requests to have the interest capitalization taken off my account due to the errors have been met with denial, reverse blame, and dismissive statements. Several reps have told me not to worry about it, it'll be forgiven by the government anyway. I have been met with similar responses when speaking with managers. 

2 ) At least once a year I request an " account review '' to show that I made payments that they are not counting towards the Public Service Loan Forgiveness program and to show I made some payments in XXXX during the time when the interest was capitalized. Each time this is met with a short letter 6- 8 months later stating all account information is accurate. It never reports what was reviewed, by whom, or for any supporting documentation from me or my prior loan servicer. Their last letter to me regarding this was on XX/XX/XXXX. 

3 ) While recently gathering evidence from my correspondence with them in case I need to seek legal recourse, I noticed all account letters in my Fedloan Servicing mailbox prior to XX/XX/XXXX have mysteriously disappeared. 

4 ) I have reached out to the Pennsylvania Higher Education Assistance Agency ( PHEAA ) Office of Consumer Advocacy ( OCA ), who responded via email that they forwarded my requests about the interest capitalization and PLSF payments to FedLoan Servicing. FedLoan has not responded. 


Based on the above data, I believe for many years FedLoan Servicing has been committing financial fraud by creating barriers for borrowers to transfer their loans without capitalization, as well as prolonging the life of the loans ( and interest paid to them ) by refusing to count eligible payments towards PSLF program. 

In my experience this has been evident by the following practices : lack of communication upon receiving transfer of my loan, giving negligent and incorrect loan payment guidance over the phone ( resulting in XXXX in interest capitalization ), refusing to count eligible payments towards the Public Service Loan Forgiveness Program without giving explanation, refusing to investigate or correct their errors, and a sham " account review '' process which lacks transparency regarding details of reviews that typically take 6-8 months to complete. 

I urgently implore you to review the above and reach back out to me, as FedLoan Servicing continues to operate under unethical and fraudulent business practices. The predatory behavior of this loan company continues to harm and manipulate naive/newly minted professionals seeking public service employment. I would like to discuss this with you more at your earliest convenience and can provide documentation as needed. 

Thank you and warm regards.