Consumer complaint received 2017-08-25
Product: Student loan — Private student loan
Issue: Dealing with your lender or servicer — Don't agree with the fees charged
Company: AES/PHEAA (MD)

This complaint is about American Education Services ( AES ) regarding a government payment made to AES which was incorrectly dispersed to the wrong loan sequences in XXXX. AESs actions negatively influenced future payment decisions due to that error which was not discovered by the borrower or rectified by AES until XXXX. This mistake has left the borrower with a significant amount of interest which accrued on an incorrect balance during the borrowers time on XXXX XXXX in the military. 
During the time period of the borrowers military service, 5 private loans and 3 federal loans were in deferment or forbearance, respectively, and were accruing interest on the total balance as payments were made. The borrower was aware that interest would be accruing and that the borrower would have to pay the interest, or allow it to capitalize. The borrower believed that each consecutive year, the borrowers loans would be accruing on a balance significantly less that the year prior, due to the borrowers enrollment into the Student Loan Repayment Program. 
At the time of the borrowers entrance into the military, the borrower was offered and had accepted the Student Loan Repayment Program ( SLRP ). This program permits the government to pay 1/3 of the original principle balance every year for 3 consecutive years during military service to equal the entire principle balance. The SLRP applications are to be filled out for each loan by the borrower, the lender, and the XXXX ( Human Resources Command ) and then government payments for the school loans will commence. The borrower filled out all required paperwork and sent it to AES to fill out its respective section. Then AES sent the applications to the Human Resources Command ( HRC ) as per the instructions. The borrower filled out 8 total applications, 5 private/ 3 federal and sent them to AES . AES then sent over applications to HRC. HRC processed the applications that AES sent and initiated government payment of the loans. 
InXX/XX/XXXX, the borrower discovered that AES dispersed the first government payment inXX/XX/XXXX to all 8 loans, but in XXXX and XXXX AES only disbursed the 2nd and 3rd iteration of the government payment to the 3 federal loans. 
After realizing AESs mistake, the borrower notified AES of the issue and attempted to get an explanation. The borrower then realized that the government payments should have been significantly more than what was actually made during XXXX, XXXX, andXX/XX/XXXX. AES told the borrower that the 5 private loan applications were denied due to a date discrepancy and were not passed on to HRC to for processing. HRC confirmed that they only received 3 federal SLRP applications. 
After further investigation, on XX/XX/XXXX an AES agent ( XXXX : ID # XXXX ) told the borrower that AES sent written notification that the 5 private loan applications were denied and had sent letters of denial to the borrower and HRC via regular mail on XX/XX/XXXX. HRC confirmed with the borrower that it did not receive a letter ( see attached ). The borrower did not receive a letter in the mail at that time. By accepting the first government payment and disbursing to ALL 8 loans onXX/XX/XXXX, AES implied that the paperwork for all loans was filled out and processed completely. 
Until this new information was discovered by the borrower, neither the borrower nor HRC had any reason to believe there had been any issue because neither party received the letter of denial in the regular mail. From XX/XX/XXXX-XX/XX/XXXX, only AES was aware that the private loan applications were denied, which meant that the borrower was still accruing interest on a much higher balance than it should have been. No further attempt to contact HRC or the borrower occurred, even as the borrower regularly contacted AES to confirm loan payments during that time period. 
Since the discovery of the disbursement mistake, the borrower is no longer XXXX XXXX military but corrected paperwork for those 5 private loans have been completed, government payments have been made, and all loans are now in good standing under repayment status. 
AES refuses to back date this newly made government payment of {$24000.00} to the dates of XX/XX/XXXX, XX/XX/XXXX, and XX/XX/XXXX ( the payment should be divided into thirds [ {$8200.00} ] as the 3 government payments previously made to AES under the SLRP on the dates listed above ). These are the dates when the private loan payments should have been made along with the federal loan payments, if AES had not disbursed government funds incorrectly and AES had sent denial letters via certified mail. 
1. Borrower is requesting that AES back date the payment {$24000.00} by dividing it into thirds {$8200.00} ( to simulate 1 payment per year of service in XXXX, XXXX, and XXXX ), and apply a {$8200.00} payment to XX/XX/XXXX, XX/XX/XXXX, and XX/XX/XXXX. 
2. Borrower is requesting AES correct the accrued interest on the new balance of the loans after each backdated payment is applied. 
3. Borrower is requesting a policy change that requires any loan application notification or any significant loan repayment issue be sent to military members directly via certified mail and require receipt confirmation from service members to ensure service members are fully aware of potential loan issues while serving on XXXX XXXX.