Consumer complaint received 2022-08-31
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Don't agree with the fees charged
Company: MOHELA (CT)

On XX/XX/XXXX I received correspondence from Mohela, student loan servicer for the U.S. Dept. of Education, stating that my existing consolidated student loans in the amount of {$36000.00} would be transferred FROM XXXX  to Mohela effective XX/XX/XXXX. The exact language from Mohela stated : " This change in servicer will NOT impact the existing terms, conditions, INTEREST RATE, or available repayment plans on your federal student loans. '' ( Direct Subsidized Consolidated Loan : {$16000.00} + Direct Unsubsidized Consolidated Loan : {$18000.00} minus accrued interest prior to the federal pandemic repayment freeze ) My current student loan interest rate with XXXX was 6.0 %. Upon accessing my account information with Mohela I discovered that my interest rate WENT UP to 6.125 %. THIS IS PREDATORY. 

According to StudentAid.gov : " A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent. There is no cap on the interest rate of a Direct Consolidation Loan. '' From <https : //studentaid.govXXXX XXXX XXXX The Feds aren't scheduled to increase student loan interest rates until XXXX. 

I am interested in participating in the PSLF program but a REQUIREMENT of this program is that I MUST consolidate any other student loans with an active repayment status into an EXISTING consolidated loan. From what I am understanding since I ALREADY HAVE a consolidated loan with Mohela my other student loans with XXXX in the amount of {$11000.00} ( active repayment status ) with an INTEREST RATE OF 2.940 % must be combined. I am hesitant to do this if Mohela is quietly raising the interest rate behind the scenes. 

I called Mohela. I received excellent customer service. I inquired about the .125 % increase when the paperwork I received from them clearly stated there would be NO change. I spoke with a customer service representative AND a supervisor both were perplexed as to how this increase occurred. I was told that they would assign my complaint to a supervisor in a division that handles interest rates but they could not tell me who the person would be as it is assigned in a queue. 

This .125 % makes a HUGE difference ( for me and my finances ). The difference is I could have a combined NEW interest rate either of 4 % or 3.96 %. It currently benefits me to consolidate my existing student loans and reduce my consolidated loan interest rate but NOT if there is going to be PREDATORY PRACTICES on the back end. Please see attached documents. 

While investigating why a percentage increase was applied the supervisor mentioned that Mohela applies an INTEREST RATE REDUCTION OF .025 % WHEN SIGNED UP FOR AUTO PAYMENT ''. No, no, no, no. My concern is if Mohlea is already increasing interest rates incrementally during a direct transfer than I am hesitant to consider consolidating further to avoid potential predatory behaviors. 

I am almost considering skipping the additional consolidation, keeping my loans with XXXX and their 2.94 % interest rate and take my chances with the Feds then deal with shady service providers. I already went through massive headaches when my loans were with XXXX which is what convinced me to consolidate in the first place.