Consumer complaint received 2017-12-09
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Don't agree with the fees charged
Company: AES/PHEAA (MI)

In short, I am submitting a complaint in regards to XXXX XXXX  capitalization of interest for no clear reason and increase in monthly loan payments due to administrative delays in processing of PAYE recertification paperwork. 

I consolidated my XXXX XXXX XXXX loans under XXXX and qualified for the Pay As You Earn ( PAYE ) plan. This was approved on XX/XX/XXXX. I was never in forbearance or deferment and always submitted my recertification paperwork on time. Any delays were administrative delays on the part of XXXX. Despite these efforts, my loans were capitalized twice, on XX/XX/XXXX and XX/XX/XXXX. The PAYE contract states that interest can be capitalized for the following reasons : if one is no longer determined to have partial financial hardship, if one leaves the plan, or does not submit recertification paperwork on time, or if one is in forbearance unpaid interest during times of forbearance may be capitalized. The contract also states that XXXX must notify you of interest capitalization, which they never did. They offer no explanation for these capitalizations. 

During Winter of XXXX XXXX took extremely long to process my recertification paperwork for PAYE. As such, my monthly payments increased from {$280.00} to the 10 year Standard repayment amount, which was {$1400.00} per month. XXXX may have considered this as an instance me not submitting the PAYE paperwork on time, however the delay was on their end in processing the forms, so it is unfair for them to charge significantly higher monthly amounts and capitalize interest based on their own delays. I made several calls to XXXX asking them to expedite the processing of this recertification paperwork, and the responses I got were " we are working on it, we are slow this time of year, why not consider forbearance if you are having trouble paying the Standard amount? We are sorry your monthly payments are unaffordable, you should submit a request to the Treasury Department and see if they can sort it out. '' I barely managed to make these Standard payments on a XXXX XXXX salary, but did for two months so that I would not go into forbearance which may result in capitalization of interest. I had XXXX submit a request to the Treasury Department to remedy the {$1400.00} monthly payments and was told by XXXX that the {$1400.00} payments would continue through XX/XX/XXXX at the latest. They continued through XXXX of XXXX. When I asked XXXX why this was the case XXXX advised me to not pay the {$1400.00} monthly payment until my PAYE monthly rate was recalculated. Finally my PAYE paperwork was processed and I went back to more reasonable monthly payments of {$110.00} under PAYE on XX/XX/XXXX. 

My starting debt was {$110000.00} which had accrued {$13000.00} in interest at the time of consolidation and loan transfer to XXXX. This was capitalized upon time of transfer for unclear reasons, so principal totaled {$120000.00}. Interest of {$5300.00} was capitalized again on XX/XX/XXXX, so principal now totals XXXX XXXX.This capitalization of interest with no explanation adds thousands of dollars to my debt which I have been diligent about paying in addition to administrative delays causing extreme monthly payment increases are egregious.