Consumer complaint received 2024-12-13 00:00:00
Product: Student loan — Federal student loan servicing
Issue: Struggling to repay your loan — Problem with forgiveness, cancellation, or discharge
Company: MOHELA
State: CA

Complaint narrative:
I am submitting this complaint because MOHELA improperly denied my eligibility for loan discharge under Borrower Defense to Repayment ( BDR ), despite my refinanced XXXX XXXX loan being directly connected to my federal student loans, which were discharged under the XXXX XXXX  XXXX settlement. 

On XX/XX/XXXX, I refinanced my federal student loans through XXXX XXXX with XXXX XXXX XXXX ( XXXX XXXX ), now serviced by MOHELA. MOHELA acknowledges that the proceeds from this private loan were used to pay off my federal student loans. 

I was a class member in the XXXX v. XXXX settlement, which discharged my federal loans due to predatory and misleading practices by the originating loan servicer and school. However, MOHELA claims that my refinanced loan does not qualify for federal benefits, including BDR. 

Issues with MOHELA 's response : Lack of Evidence : MOHELA cited specific disclosure language stating that refinancing federal loans forfeited federal benefits. However, they failed to provide evidence that I received and agreed to this disclosure during the loan application process. 
Connection to Federal Loans : MOHELAs acknowledgment that my refinanced loan paid off federal student loans ties this debt directly to my discharged federal loans, making it eligible for relief.

Misleading Practices : My decision to refinance was based on incomplete or misleading information, which is precisely the type of behavior addressed under Borrower Defense to Repayment. 
Dates and Actions Taken : On XX/XX/XXXX, I made my final payment of {$3800.00}, fully satisfying the refinanced loan. 

I submitted my initial complaint to MOHELA regarding loan discharge eligibility. 
MOHELA denied my request, claiming the loan is private and ineligible for federal forgiveness, without sufficient evidence or legal basis. 

I believe MOHELAs response improperly denies me the protections and relief I am entitled to under Borrower Defense to Repayment. The refinancing process should not nullify my eligibility for relief, particularly when the loan directly originated from federal student debt that was discharged under the XXXX XXXX. XXXX settlement. 

Resolution Requested : I request that MOHELA : Reevaluate my eligibility for Borrower Defense to Repayment relief. 

Provide verifiable evidence supporting their denial, including documentation proving I was fully informed and agreed to forfeiting federal benefits during the refinancing process. 

The attached loan document fails to explicitly disclose that refinancing federal student loans would forfeit federal benefits, including protections under Borrower Defense to Repayment. Any forfeiture of such significant benefits requires clear and conspicuous disclosure, which is absent here. MOHELA claims this forfeiture was disclosed but has not provided verifiable evidence that I was fully informed and agreed to these terms at the time of refinancing. 

MOHELAs actions are both unsupported and inconsistent with the protections established under Borrower Defense. I urge the CFPB to review this matter and ensure fair resolution.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation