Consumer complaint received 2021-07-20
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Trouble with how payments are being handled
Company: AES/PHEAA (KY)

FedLoan Servicing ( aka PHEAA ) has repeatedly caused delays in processing my loans which lead to me being unable to make a qualifying payment under the Public Service Loan Forgiveness program.

Essentially my claim is that repeated administrative errors on FedLoan 's part have deprived me of 4 qualifying payments, despite the fact that my employments has been certified as PSLF-qualifying from an unbroken period from XX/XX/XXXX until XX/XX/XXXX. My claims break down into two categories : 1 ) I should be permitted to make a " catch-up '' PSLF-qualfying payment of {$240.00} for XX/XX/XXXX and be given credit for a " catch-up '' qualifying payment for XX/XX/XXXX which I've already been permitted to pay. PSLF failed to notify me of the ability to do so during a window that they permitted earlier and has since recognized that I deserved to make a qualifying payment for one and not the other.

FedLoan failed to properly transfer my paperwork when I transferred loans from XXXX XXXX in XXXX. During that time, they were unable to bill me and instead put me into forbearance for XX/XX/XXXX. As documented in XX/XX/XXXX, I was no longer in forbearance, but instead " a payment was not due. '' FedLoan later admitted their error in a letter that I have now obtained, dated XX/XX/XXXX. ( See Ex. Q. ) In that letter, I was told to provide " catch-up '' payments by XX/XX/XXXX and they would qualify. Unfortunately, I never received that letter and only got a copy in XXXX when I began disputing these issues with FedLoan. When FedLoan claims they sent the letter ( XX/XX/XXXX XXXX I was in the military, so perhaps I missed it because of that, but regardless, I never received that letter. FedLoan also never called me to confirm receipt or advise me of this information, nor did they advise me of this in many calls I've placed trying to get this fixed. Therefore, the deadline passed without me ever becoming aware of the fact that FedLoan 's issues in transferring my loans lead to me missing two qualifying payments. Given that FedLoan was able to permit me to make a " catch-up '' payment after the fact and admitted the fault on their part, I should be able to make those same catch-up payments now that I am aware of the ability to do so.

2 ) I should be permitted to make two " catch-up '' PSLF-qualfying for XX/XX/XXXX, and XX/XX/XXXX, as I was improperly denied credit due to a repeated XXXX cent billing error on FedLoan 's part that they failed to catch, never explained, after which they forced me into forbearance : I requested to be moved from IBR to PAYE in XXXX of XXXX. I received confirmation of this request on XX/XX/XXXX ( see Ex. A ). In that XX/XX/XXXX letter, I was told that I would be put on either the standard plan or a reduced payment forbearance plan. I was told " to remit payment no later than 15 days after the due date '' and that, if I did so, I would then be switched over to the new requested repayment plan ( PAYE ). I then requested a reduced payment forbearance for my XX/XX/XXXX plan, which was confirmed in a letter dated XX/XX/XXXX. ( see Ex. C ) That letter stated that I needed to make a reduced forbearance payment and, although I did not see it at the time, it said the payment should be {$5.00}. It also stated that FedLoan would " continue to send a monthly notification reminding [ me ] to make [ my payment ]. 

However, in that subsequent notification, my monthly bill of XX/XX/XXXX, XXXX then stated that the amount due was {$4.00}. ( See exhibit D ). I can't recall exactly what happened, but for some reason my account did not direct debit on XX/XX/XXXX even though I had not requested a suspension ( perhaps this happens automatically ). When I called on XX/XX/XXXX, I was told simply to make the reduced payment forbearance listed on my bill, at which point I could transfer out of my old IBR payment. ( See Ex. P, XXXX Call History entry for XX/XX/XXXX ). At no point was it made clear that I should ignore the amount due on my bill, and instead go off of another number that was listed on a different letter. Accordingly, on the same day, I paid what FedLoan had billed me : {$4.00} ( See Ex. E, pg 5, noting {$4.00} payment on XX/XX/XXXX ). Given that this was within 15 days of the payment due date, and was the amount billed, this should have completed my transition from IBR to PAYE per the instructions in Exhibit A and I should have been able to make qualifying payments on XX/XX/XXXX and XX/XX/XXXX under PAYE. 

Yet on XX/XX/XXXX, I received another FedLoan bill, once again asking me to pay {$4.00}, this time by XX/XX/XXXX. ( See Ex. F ). It acknowledged that I had just paid on XX/XX/XXXX but for some reason did not count that as qualifying for the reduced payment forbearance, even though it was the same amount now being billed. The very next day, I received another letter, telling me that, rather than paying {$4.00}, I now owed {$2600.00}. ( See Ex. G ). Panicking after seeing two different numbers from FedLoan in two days, and not wanting to have {$2600.00} autodebited from my account for no discernible reason, I suspended direct debit the same day. ( See Ex. H ). I also called FedLoan again on XX/XX/XXXX and was advised once again to make an IBR opt-out payment and to " wait to receive the reduced bill prior to making the payment. '' So once again, FedLoan told me explicitly to base my payment on the reduced bill, which told me to pay {$4.00}. 

Based on that phone call, I manually made a payment on XX/XX/XXXX, of the amount once again listed on my bill - {$4.00}. ( See Ex. E, p. 5 ). I called FedLoan on XX/XX/XXXX and " was advised that since an additional payment was made, the IBR opt out can proceed. '' ( See Ex. P, call history ). So although I should have been able to get credit for XX/XX/XXXX because I paid the required XX/XX/XXXX amount within 15 days, I was explicitly advised over the phone that I would begin switching over after XX/XX/XXXX into PAYE and should definitely have gotten credit for XX/XX/XXXX. 

Instead, on XX/XX/XXXX, I received a notification once again that my account would be autodebited the standard amount of {$2600.00} ( see Ex. I ) and, even more troublingly, was sent a bill on XX/XX/XXXX telling me that I had failed to make a previous standard payment AND owed a new standard payment, so the bill was now for {$5200.00} ( see Ex. J ). 

On XX/XX/XXXX, I was finally approved for PAYE, but inexplicably, my first XXXX payment was not effective until XX/XX/XXXX. ( See Ex. K ). The same day I was approved, I also received a delinquency notice telling me I still owed {$2600.00} from XX/XX/XXXX. ( See Ex. L ). Panicking, I called FedLoan, who once again confirmed that the PAYE change was completed, but could not explain why I would have owed {$2600.00} for either XXXX or XXXX since I had been approved for reduced payment forbearance and had now made qualifying payments TWICE. Not once did they recognize the billing error that had led to this issue, and they said my options were either to pay more than {$5000.00} or be put into forbearance. Panicking and frustrated, I requested to be put into forbearance until XXXX, since I could not afford to pay {$5200.00}. ( See Ex. O ). 

I should never have been put in forbearance. While I recognize that I could never have gotten credit for XX/XX/XXXX, since I would have to make a reduced payment forbearance and that should have qualified, I paid the amount FedLoan billed me within 15 days of XX/XX/XXXX. I then paid it AGAIN in advance of XX/XX/XXXX. I'm guessing the issue is that FedLoan 's bill was for the incorrect amount, since now I see from the other letters that {$5.00} was required and not {$4.00}, but over two billing cycles and multiple calls, no one from FedLoan ever told me the problem could be solved by simply paying an additional cent. In fact, to the contrary, I was advised by FedLoan in XXXX that I had successfully made a payment and would be transferred to the new payment plan. Even after I was told my PAYE plan was approved, I was still being billed incorrectly. I should have been able to make PAYE payments for XX/XX/XXXX and XX/XX/XXXX and should have the opportunity to do so as " catch-up '' payments now. 

I have contacted the PHEAA Office of Consumer Advocacy, which resulted in them granting me the catch-up payment for XX/XX/XXXX but denying the rest, despite the fact that I was unable to make a XX/XX/XXXX payment under the exact same circumstances. ( They also had previously denied that I was eligible to make a catch-up payment for XX/XX/XXXX in an earlier CFPB complaint, so they are also internally inconsistent in that manner. ) I also have a case with the US Department of Education Federal Student Aid Ombudsman on second level appeal - they have been trying to get an answer from PHEAA/FedLoan for more than six months but instead, FedLoan has apparently refused to answer them ( according to their e-mails, the first and last of which I am attaching ).