Consumer complaint received 2022-03-10
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Received bad information about your loan
Company: AES/PHEAA (IL)

To whom it may concern : On XX/XX/XXXX, I called my student loan servicer FedLoan Servicing to get some clarifying information regarding certifying my Income-Driven Repayment ( IDR ) plan. I called specifically to ask whether during the Cares Act Forbearance if interest would capitalize if I went from the Pay As You Earn ( PAYE ), to the Revised Pay As Earn ( REPAYE ) plan. It was my general understanding that it might. However, because this was only a rectification during Cares Act Forbearance, I thought there might be other provisions that would prevent interest capitalization. I submitted an IDR recertification application on studentaid.gov website and did not receive an pop-op disclosure about interest capitalization. Then : 1. I immediately called Fedloan Servicing. The agent on the phone explicitly says during the call, No, your interest will not capitalize during the Cares Act Forbearance, so you will be fine.

2. I hung up the phone and researched the studentaid.gov website to make sure I was correct. When I found the paper application on the website, I said that interest would capitalize, so I immediately recertified for my original PAYE plan about 20 minutes later. I called FedLoan Servicing again and explained what happened. I told the representative that I previously called to confirm whether interest would capitalize if I switched plans and the agent told me no! I told the agent that I had submitted another recertification and the representative assured me that the last application would be the one they processed. I asked him whether it was true that interest would capitalize, and he confirmed that it would not during the Care Act forbearance. I asked if he was sure and he said yes. During that call, I reapplied to the REPAYE because two agents had confirmed the regular capitalization process would not occur.

3. After I hung up, I call back a third time, just to make sure, and the third agent said, yes, generally the interest would capitalize, but because of the Care Act Forbearance it would not, I just needed to make sure I switch before we when back into repayment in XX/XX/XXXX. I said, are you sure, because I have {$75000.00} of interest, and if it is going to capitalize, I will just go back to the original plan. She reassured me that I was fine. 

On XX/XX/XXXX, I received a confirmation letter from FedLoan Servicing, stating that on XX/XX/XXXX when you changed your repayment plan .... the amount of interest the capitalize was {$71000.00}. In that same letter, it also stated, in the fourth paragraph, that There has not been any interest capitalized with Fedloan Servicing due to an Administrative Forbearance or due to the processing of an IDR. This is conflicting information! 

On or around XX/XX/XXXX, I called Fedloan and spoke to a Escalations Agent, Case # XXXX. I explained the situation. I asked him to listen to the calls and after about 20 minutes, he told me that he would just revert me back to my original plan and reverse the interest. 

On XX/XX/XXXX, I received a letter dated XX/XX/XXXX, which stated that they would not be able to reverse the interest capitalization, which Fedloan Servicing had originally reversed. Every time they do this I see a XXXX XXXX drop in my credit score.

The Dodd-Frank Act, 12 USC 5536 , prohibits unfair, deceptive, or abusive acts or practices. An act or practice is deceptive when : 1. the act or practice misleads or is likely to mislead the consumer ; 2. the consumers interpretation is reasonable under the circumstances ; and 3. the misleading act or practice is material.

Fedloan Servicing engaged in a deceptive act or practice in violation of 12 USC 5536, by misrepresenting to the borrower ( me ) whether a capitalizing event would occur when switching IDR plans during the Cares Act Forbearance. Generally, switching plans would cause interest to capitalize, but I was reassured that the Care Act Forbearance suspended that practice until the forbearance ends. Fedloan Servicing points out in the paper application that it states that interest will capitalize. This is obscured reasoning. My promissory note for when I took out my loan also states the interest will accrue monthly on all my loans, but that is not occurring during the Care Act either, so I am not sure what the point is. I called the servicer to confirm whether there were special provisions because of the Cares Act and I was told yes. Furthermore, I was told that they would reverse the capitalization. The representations by three of the Fedloan agents misled me, a reasonable borrower, by causing me to believe that the Care Act Forbearance provided additional provisions that prevent interest capitalization with switching between IDR plans. It was reasonable for me to believe it was true, because three separate agents confirmed it ( review the phone calls ). The misrepresentations are material because it caused {$71000.00} of interest to be capitalized on my student loans.

If they did this to me, they most likely have done the same to millions of borrowers during the Cares Act Forbearance. The CFPB should immediately investigate this matter. I want my capitalization to be reversed immediately. 



Thank you,