Consumer complaint received 2025-12-03 00:00:00
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Trouble with how payments are being handled
Company: MOHELA
State: LA

Complaint narrative:
To Whom It May Concern : I am submitting this complaint to request urgent corrective action regarding XXXX misapplication of multiple federally authorized lump-sum payments, contradictory servicing explanations, wrongful delinquency reporting, removal from my IDR plan without notice, and the resulting significant credit damage and administrative harm. 
1. Background : Federally Authorized XXXX  Lump-Sum Payments I am a XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX. Under XXXX  service obligations, I have made very large standardized payments intended to satisfy months ( and in some cases years ) of future loan payments. 
My lump-sum payment history is as follows : {$50000.00} payment to FedLoans Date 1 ( as documented in MOHELA file uploads ) {$50000.00} payment to FedLoans Date 2 ( as documented in MOHELA file uploads ) {$50000.00} payment paid directly to MOHELA on XX/XX/XXXX These were official XXXX payments meant to keep my account in good standing and fulfill my federal service-based repayment obligations. These payments should never have resulted in delinquency, new billing, or negative credit actions. 
2. MOHELAs Contradictory Explanation of Paid-Ahead Status After my loans were transferred from FedLoans to MOHELA in XXXX XXXX, I began receiving bills even though I had already made two prior {$50000.00} XXXX payments XXXX 
During one phone call, a MOHELA representative explicitly told me : Your account was supposed to be in paid-ahead status, and that is why you should not be receiving bills. The {$50000.00} was misapplied. 
This was the only representative who used that terminology, but I relied on their explanation. I assumed paid-ahead status was the correct federal term and referenced it in future calls. 
Other representatives acknowledged the issue and promised to escalate and rectify but provided no resolution, no consistent explanation, and no corrective action. 

3. MOHELA Later Contradicted Its Own Explanation Despite being told that my account should have been paid ahead for months due to the lump-sum payments : MOHELA later reversed its explanation without giving notice, began generating unexpected monthly bills, treated my account as delinquent based on their own misapplied payment handling, and continued to send conflicting and confusing communications. 
This is a servicer-caused delinquencynot borrower-caused. 
4. Third {$50000.00} XXXX Payment Also Mishandled On XX/XX/XXXX, I submitted an additional {$50000.00} XXXX payment directly to MOHELA. 
Even with this substantial payment : My account still reflected delinquency, No one corrected the prior misapplication issues, My IDR/SAVE status was removed without my knowledge, And MOHELA continued reporting false negative information to credit bureaus. 
5. IDR Removal Without Notification At some pointwithout noticeMOHELA removed me from my IDR plan. 
I did not receive : any warning, any recertification request, any notice of removal, or any explanation for the change. 
This directly contradicts federal servicing rules requiring advance notice before removal from IDR. 


6. False Delinquency Reporting & Credit Damage Despite being in active communication with MOHELA, providing documentation, submitting disputes, and making federally recognized XXXX payments, MOHELA reported delinquency information to credit bureaus. 
This false reporting caused : a significant drop in my credit score ( I was previously over XXXX ), harm to my ability to obtain future credit, distress and reputational harm, and administrative burden as I continue attempting to correct their errors. 
Credit bureaus have refused to correct the issue because MOHELA continues to confirm the inaccurate reporting. 
7. Servicing Failures & Administrative Harm Throughout this process, I have : Spent hours attempting to resolve MOHELA errors, Filed multiple disputes that were ignored or closed without correction, Been transferred repeatedly with no resolution, And never received a case XXXX from the Department of Education Ombudsman system, possibly due to current restructuring. 
This has caused substantial emotional and administrative harm. 

Although MOHELAs dashboard continued to show IDR-related fields, MOHELAs actions made it clear that my account was not being treated as enrolled in an active Income-Driven Repayment plan. My monthly bill suddenly reappeared, I was reported as past-due, and delinquency was sent to the credit bureaus. This is legally impossible for a borrower who is actively in IDR. Therefore, MOHELAs handling of my account functionally removed me from IDR without notification. This improper removal occurred after MOHELA misapplied the {$50000.00} NHSC payment, which was intended to cover my required payments and prevent exactly this situation. 

8. Summary I have made {$150000.00} in federally recognized XXXX payments. 
Despite this, MOHELA misapplied payments, contradicted its own explanations, removed me from IDR without notice, falsely reported delinquencies, and caused significant harm. 

I am requesting CFPB intervention because internal resolution with MOHELA has repeatedly failed with over 2 years of concerted efforts. 

Thank you for your prompt attention to this matter. 

ATTACHMENT INDEX Supporting Documentation Provided Attachment 1 Mohela Dispute.pdf Summary : Initial dispute letter detailing errors made by Mohela regarding payment posting, misapplied lump sums, and incorrect delinquency reporting. 
Attachment 2 Mohela acct history.pdf Summary : Complete Mohela account history showing incorrect application of payments, inaccurate past-due balances, and inconsistencies with IDR plan placement. 
Attachment 3 Mohela bank payment.pdf Summary : Bank record showing completed payment, proving Mohela failed to apply received funds correctly and subsequently reported false delinquencies. 
Attachment 4 Mohela billing statement XXXX Summary : Billing statement showing erroneous charges and incorrect balance information on XX/XX/XXXX. 
Attachment XXXX Mohela billing statement XXXX Summary : Billing statement showing continued inaccurate charges and improper delinquency status as of XX/XX/XXXX. 
Attachment 6 Mohela Equifax Dispute Results.pdf Summary : Equifax dispute findings in which Mohela verified incorrect negative information despite evidence of timely payments and servicing errors. 
Attachment 7 Mohela Forbearance letter.pdf Summary : Mohela correspondence instructing borrower to enter forbearance while they worked on resolving issues, which forced borrower out of IDR and harmed credit.

Attachment 8 Mohela IDR plan extension letter.pdf Summary : Letter showing changes to borrowers Income-Driven Repayment plan, including unexplained removal or extension inconsistent with borrower actions. 
Attachment 9 Mohela notice of repayment schedule change.pdf Summary : Notice showing sudden and unexplained change in repayment schedule, not initiated or authorized by borrower.

Attachment 10 Mohela past due XXXX Summary : Past-due notice dated XX/XX/XXXX showing false delinquency triggered by Mohelas servicing errors. 
Attachment 11 Mohela past due XXXX Summary : Past-due notice dated XX/XX/XXXX reflecting continued erroneous delinquency reporting despite ongoing disputes. 
Attachment 12 Mohela response to credit bureau concern.pdf Summary : Mohelas incomplete response to borrowers dispute regarding false credit reporting ; provides no evidence or substantiation.

Attachment 13 Mohela XXXX  Dispute Results.pdf Summary : XXXX  dispute outcome in which Mohela again verified incorrect delinquency data, perpetuating credit damage. 
Attachment 14 Credit Damage Caused by Mohela XXXX  and XXXX Summary : Screenshots showing significant drop in borrowers XXXX XXXX directly resulting from Mohelas incorrect reporting to multiple bureaus.

Company response to consumer: Untimely response