Consumer complaint received 2018-03-30
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Don't agree with the fees charged
Company: AES/PHEAA (CA)

Please refer to case number XXXX, which is now closed. I am submitting a second complaint because the response from the lender has increased my concerns over the propriety of the process. For ease of review, I will first include my initial complaint, then the lender 's response and finally my additional comments. 

Initial complaint : " Loan default was entered on my account on XX/XX/XXXX. Due to said default, I incurred significant and burdensome penalties of approximately {$15000.00}, not including interest, which I continue to pay off to this day. The default was entered in error as I timely requested an emergency medical forbearance prior to the date that the default occurred. On or about XX/XX/XXXX, I was admitted to XXXX XXXX in XXXX XXXX, California. I was struggling with XXXX  and XXXX  dependency and due to my troubles, I was unemployable and unable to pay my student loans. At the time that I was admitted to the hospital, I was aware that my student loan account was near default. Therefore, after admittance to the hospital, I contacted AES to notify them of the situation. I was instructed to fill out a medical hardship signed by my doctor and send the form to them via fax. I did as instructed and sent the form to them prior to XX/XX/XXXX. Approximately 30 days after being admitted to the hospital, I was discharged and returned home. However, when I returned home, I was notified of the default. I immediately contacted AES and was told that my request was received too late EVEN THOUGH I SENT THE REQUEST IN A TIMELY FASHION AS INSTRUCTED BY AES. The default and rehabilitation process was explained to me and although I disagreed with the result, I immediately undertook measures to start the rehabilitation process. At the time, I did not have the strength to fight the default. It was more important to me to get healthy and resume my life. I did just that I have been clean and sober for nearly 13 years and have been employed throughout that time period. I have made every single payment to AES. However, due to the increased financial burden and payment schedule, my debt to AES has barely decreased and every month it is a struggle to meet all of my financial obligations. '' Lender 's Response : " The Office of Consumer Advocacy at the Pennsylvania Higher Education Assistance Agency ( PHEAA ) received recent correspondence through the Consumer Financial Protection Bureau ( CFPB ) portal regarding your rehabilitated student loan account, administered by American Education Services ( AES ). The OCA performed a thorough review of your Consolidation Loan, which was issued under the Federal Family Education Loan Program ( FFELP ). Specifically, we reviewed the financial activity, the communication history, and any available options. In the inquiry, you indicated that the principal balance on your Federal Consolidation Loan increased significantly following its default to the guarantor, the Pennsylvania Higher Education Assistance Agency ( PHEAA ), and the subsequent rehabilitation process. You requested for the default status to be reversed and for all payments to be reapplied to the loan. Your Federal Consolidation Loan disbursed on XX/XX/XXXX was initially serviced by AES. The original principal balance of the loan was {$56000.00}. Because sufficient payments were not received, the loan became significantly past due. As mentioned in your inquiry, you attempted to defer repayment on the loan due to your participation in a rehabilitation program. While the initial deferment application was received on XX/XX/XXXX, a default claim was already in the process of being filed with the guarantor, and the loan defaulted to PHEAA effective XX/XX/XXXX. The default balance was {$67000.00}. PHEAAs payment records confirm that you made timely payments from XX/XX/XXXX through XX/XX/XXXX. By doing so, you qualified for the loan rehabilitation process to have the loan removed from default status. A copy of the document that you signed for the rehabilitation process is attached. Some personal information has been removed for privacy reasons. At that time, you agreed to repay the total amount due on the loan, inclusive of the accrued outstanding interest, collection costs, and other charges assessed. At the conclusion of the rehabilitation process, the loan returned to AES for servicing effective XX/XX/XXXX. The principal balance of the loan at that time was {$75000.00}. Since that time, you have been making regular payments on the loan and reduced the principal balance to {$68000.00}. AES is unable to reverse the sequence of events that occurred on the account. You remain responsible for satisfying the loan debt, inclusive of accrued interest, principal balance, and applicable late fees. However, if you are experiencing financial difficulties with repaying the loan debt, repayment options and alternatives, including an Income-Based Repayment ( IBR ) plan, are available. Additional information may be obtained by visiting the website at aesSuccess.org or by calling AES. No additional action is planned by the Office of Consumer Advocacy at this time. You may obtain more information on the status of the Federal Consolidation Loan by calling AES directly at XXXX. Representatives are available Monday through Friday from XXXX XXXX. to XXXX XXXX., ET. '' My Response : 1. My deferment request was marked received by the lender on XX/XX/XXXX. However, the request was actually received by them on XX/XX/XXXX ( please see attached request with fax confirmation ). The loan did not default until XX/XX/XXXX. I believe the lender intentionally delayed acknowleding receipt of the request until after it was already too late ; 2. According to the lender 's response above, before the loan went into default, the balance was {$56000.00}. The default balance was {$67000.00}. Timely payments were made from XX/XX/XXXX through XX/XX/XXXX. By the time the loan went back to the lender for servicing, the balance somehow jumped to {$75000.00}! Why did the loan jump even higher after I made timely payments?