Consumer complaint received 2019-08-20
Product: Student loan — Federal student loan servicing
Issue: Struggling to repay your loan — Problem lowering your monthly payments
Company: AES/PHEAA (NY)

I would like to bring to your attention an ongoing issue with FedLoan, which is servicing my PAYE income-based student loan repayment plan. I have outlined a timeline of events below that covers the past couple of months, and then identify several specific issues I would like to bring up. I have documentation of everything I mention below and would be happy to provide it upon request.Prior to XX/XX/2019, my monthly payment amount was set at XXXX. Then, beginning XX/XX/2019, my income dropped significantly. On XX/XX/XXXX, I reported this change in income via a recalculation request and attached paystub from XX/XX/XXXX. I included, as the instructions ask, a note indicating that the pay period was biweekly. My pre-tax deductions are listed on my paystub as either “tax deferred” or “pre-tax”, so I expected it would be clear that these are not part of my taxable income, but I just wanted to be sure it was extra clear, so I also included, though it was not requested in the instructions, a breakdown of my gross pay, my total pre-tax deductions, and my Adjusted Gross Income.On XX/XX/XXXX, I received notice that, as a result of my drop in income and recalculation request, my payment amount had INCREASED to XXXX (the notice was dated XX/XX/XXXX, but I was notified of the amount via email on XX/XX/XXXX). That same day, I notified FedLoan that they had miscalculated my new income. On XX/XX/XXXX, in response to myXX/XX/XXXX message, I received a message from FedLoan stating that my paystubs did not indicate pre-tax deductions. While this is untrue, later that day I went ahead and sent another paystub in which I even more clearly outlined and demarcated the pre-tax deductions on my paystub, along with text documentation in my response message listing each pre-tax deduction and its amount. I also noted that “It appears I've been paying way too much since FedLoan was not accounting for pre-tax deductions, and I did not know I was responsible for sending supplemental documentation about which deductions are pre- vs. post-tax on my paystub.” I asked if there was any communication to borrowers indicating that they needed to send supplemental documentation (as I wondered if I had missed communication of that sort at some point) in order to have their AGI used to calculate payments instead of their gross income, and requested that if not, I would like to have my overpayments refunded. On XX/XX/XXXX, I received a response indicating that FedLoan “would not be able to retroactively adjust the installment amount of your payments.” My question about the transparency of FedLoan’s policy of defaulting to gross income was not answered.OnXX/XX/XXXX, I responded to ask why the charges could not be refunded, and asked if there was any way I could appeal the decision internally. On XX/XX/XXXX, my payment amount was adjusted from XX/XX/XXXXto XXXXXX/XX/XXXX I received no response to my XX/XX/XXXX message, and on XX/XX/XXXX I followed up with the same questions. Later that day, I received a response from FedLoan stating that my previous overpayments would not be refunded because my “original documentation was not clear.” I responded objecting to that representation of my original documentation, and framing the issues I outline below. I also again asked if there was any way I could appeal the decision internally.On XX/XX/XXXX, my payment amount was adjusted again, to XXXX. That day, I sent a message to FedLoan again requesting that they adjust my monthly payment amount to the appropriate amount, or explain to me how they arrived at the XXXX amount, since it is XXXX   higher than the Department of Education’s formula would result in. I have several issues here that I would like to highlight:FedLoan has been overcharging me by hundreds of dollars each month and, even after acknowledging that my payment amount had been incorrect, refuses to provide any recompense, using the excuse that my documentation was “unclear.” I provided complete and clear documentation of my income via a complete paystub which lists income deductions that are "pre-tax" and "tax-deferred," and even added calculations outlining my gross income minus my pre-tax income and the resultant AGI. The claim that my documentation was unclear is simply untrue. FedLoan consistently miscalculates my payment amount even once we agree on the income numbers that should be used, and have absolutely no transparency about how they arrived at the payment amounts they did. Please see my calculations below and please, tell me if I am missing something, because it sure seems like I am still, after all of this communication clarifying my situation, being charged XXXX too much per month!! According to the Department of Education, monthly payments for the PAYE program are set at 10% of the difference between the borrower's AGI and 150% of the federal poverty level. My bi-weekly paychecks have a gross pay of XXXX, with an AGI of XXXX after pre-tax deductions. Multiplied by 26, that gives me a one-year AGI of XXXX and a monthly AGI of XXXX. The federal poverty level is XXXXXXXX, and 150% of the poverty level is XXXX, making the monthly 150%-of-poverty-amount XXXX. This means my monthly AGI minus 150% of the poverty line is XXXX (XXXX minus XXXX) and my monthly payment should be XXXX. I have asked FedLoan representatives over and over again how they arrived at the number they did, and have still received no answer.I asked multiple times if there was a way I could appropriately escalate the issue internally via an appeal/complaint process, or by speaking with an Ombudsman or similar, and each time received no answer...although it seems that the consumer advocacy office, which I found on my own, may have turned out to be the appropriate avenue.FedLoan seems to, by default, use a borrower’s gross income to calculate payment amounts for non-tax-return recalculation requests, unless the borrower manually outlines non-taxable income and adds extra labeling to such effect onto a paystub even when to even a casual observer the non-taxable income is already transparently identified on the paystub - and in no way instructs or even suggests that this is necessary to avoid having payments based on gross income in any of their literature or communication. What's more, FedLoan knows that most people have some pre-tax deductions. To knowingly and continually use an applicant's gross income, and to make no attempt to incorporate pre-tax deductions that are included in income documentation nor ask for clarification from the applicant (until the issue is forced upon them by the applicant), demonstrates at best gross negligence, and at worst willful deceit, regarding my right to be charged a monthly payment that is in accordance with my adjusted gross income.At every turn, this process has been marked by a lack of transparency or accountability, a reticence to answer my questions in full or at all, and a willingness to take advantage of unknowing loan holders. I am quite frankly disgusted with the process and feel completely powerless to do anything after many attempts.On XX/XX/XXXX, I also sent a letter to the FedLoan Consumer Advocacy Office, detailing the above issues. On XX/XX/XXXX that office sent me an acknowledgement that my monthly payment “was previously calculated incorrectly.” It stated that the correct payment amount going forward should be XXXX. The letter still did not explain what the mistake was nor how the payment amount was determined. The letter and a followup letter on XX/XX/XXXX (after I requested further explanation on this topic) from FedLoan’s Consumer Advocacy Office also stated that my payment amounts for XXXX and XXXX (XXXX   and XXXX, respectively) would not be adjusted or reimbursed retroactively, since “the documentation you provided on XX/XX/2019 did not explicitly list the pre-tax deductions on your pay stub.” As I’ve stated above, this is both untrue (as I did in fact identify my deductions) and misleading (as FedLoan provides no guidance or indication in their literature or communication that the hyper-explicit and annotated documentation they seem to now be requiring is necessary).