Consumer complaint received 2026-01-12 00:00:00
Product: Student loan — Private student loan
Issue: Dealing with your lender or servicer — Don't agree with the fees charged
Company: MOHELA
State: OH

Complaint narrative:
I am filing this complaint regarding serious student loan servicing violations involving my XXXX private student loans ( XXXX Signature Student loans and XXXXXXXX Smart Option  loan ), which have been serviced by XXXX XXXX, XXXX, and currently MOHELA. Despite borrowing {$70000.00} and paying {$100000.00} over XXXX  years, I currently owe {$110000.00} due to what I believe are illegal servicing practices including improper forbearance steering, predatory interest practices, failure to properly apply payments, and violations related to my deceased cosigner. Only {$17000.00} ( 16.7 % ) of my payments have been applied to principal, while over 83 % went to interest and fees. 

LOAN DETAILS Original Loans : Loan 1 : Signature Student Loan ( Account ending in XXXX ) Loan 2 : Signature Student Loan ( Account ending in XXXX ) Loan 3 : Smart Option Student Loan ( Account ending in XXXX ) Loan 1 - Signature Student Loan XXXX : Original Balance : {$18000.00} Current Balance : {$36000.00} Interest Rate : 13.250 % Total Paid : {$30000.00} Applied to Principal : {$4100.00} ( 13.7 % ) Applied to Interest : {$25000.00} ( 86.3 % ) Loan 2 - Signature Student Loan XXXX : Original Balance : {$32000.00} Current Balance : {$52000.00} Interest Rate : 12.750 % Total Paid : {$47000.00} Applied to Principal : {$10000.00} ( 22.0 % ) Applied to Interest : {$36000.00} ( 78.0 % ) Loan XXXX - Smart Option Student Loan XXXX ( with deceased cosigner ) : Original Balance : {$19000.00} Current Balance : {$30000.00} Interest Rate : 14.250 % Total Paid : {$28000.00} Applied to Principal : {$3100.00} ( 11.1 % ) Applied to Interest and Fees : {$24000.00} ( 88.9 % ) TOTALS : Total Original Amount Borrowed : {$70000.00} Total Current Balance Owed : {$110000.00} ( 168 % of original ) Total Amount Paid Since XXXX : {$100000.00} ( 149 % of original ) Total Applied to Principal : {$17000.00} ( 16.7 % of payments ) Total Applied to Interest/Fees : {$87000.00} ( 83.3 % of payments ) Original Loan Dates : XXXX Current Servicer : MOHELA ( since XXXX ) Previous Servicers : XXXX XXXX : XXXX XXXX XXXX XXXX : XXXX - XXXX MOHELA : XXXX - Present SPECIFIC VIOLATIONS AND CONCERNS 1. IMPROPER FORBEARANCE AND DEFERMENT STEERING Grace Period Ended : XX/XX/XXXX Extended Forbearance/Deferment Period with Capitalized Interest : XX/XX/XXXX through XX/XX/XXXX ( over 5 years ) During this period, I experienced financial difficulty making my payment amounts. Instead of being counseled about beneficial alternatives, I was repeatedly placed into forbearance and deferment programs. My payment history shows : Major capitalized interest balances added during this entire period Late fees assessed throughout this period ( XX/XX/XXXX - XX/XX/XXXX ) My last deferment payment was {$540.00} on XX/XX/XXXX, showing the dramatically reduced payment amounts during this period The Problem : At no time during these periods was I adequately counseled about alternatives to forbearance that would have been more financially beneficial to me. As private loans, these did not have access to federal income-driven repayment plans, but I should have been offered information about : Extended repayment plans that could have kept me current without massive capitalization Graduated repayment options Interest-only payment periods Other alternatives to full forbearance that would have prevented the devastating interest capitalization I experienced Instead, I was steered into forbearance options that caused interest to capitalize repeatedly and my balance to balloon from {$70000.00} to over {$110000.00}. With interest rates ranging from 12.750 % to 14.250 %, allowing over XXXX years of capitalization was catastrophic to my financial future. I believe this practice was designed to benefit the servicer at my expense, as interest continued to accrue and compound during these periods, generating maximum revenue for the servicer while devastating my financial situation. 
I believe my situation is directly related to the predatory forbearance steering practices that resulted in XXXX 's {$1.00} billion settlement with XXXX state attorneys general in XXXX, which included violations related to both federal and private student loans. I request review of whether I am eligible for relief under that settlement or other remediation programs. 

2. PREDATORY INTEREST RATES AND EXCESSIVE CAPITALIZATION My three loans carry interest rates of 12.750 %, 13.250 %, and 14.250 % - rates that are extraordinarily high and border on predatory, particularly when combined with the aggressive capitalization practices employed during the 5+ year forbearance period. 
The Mathematical Devastation : I borrowed {$70000.00} I have paid {$100000.00} ( 149 % of what I borrowed ) I now owe {$110000.00} ( 168 % of what I borrowed ) This means I have paid back {$34000.00} MORE than I borrowed, yet I now owe {$47000.00} MORE than I originally borrowed Specific Concerns : Interest capitalization during the 5+ year forbearance period ( XXXX ) was allowed to compound repeatedly Late fees were assessed during forbearance periods when I was explicitly told I didn't need to make full payments The combination of high interest rates ( 12.750 % -14.250 % ) with aggressive capitalization practices appears designed to trap borrowers in perpetual debt Payment application appears structured to maximize interest collection and minimize principal reduction 3. GROSSLY IMPROPER PAYMENT APPLICATION The payment application across all three loans demonstrates a pattern that I believe violates basic fairness and potentially my loan agreements : Loan XXXX : 86.3 % to interest, only 13.7 % to principal Loan XXXX : 78.0 % to interest, only 22.0 % to principal Loan XXXX : 88.9 % to interest and fees, only 11.1 % to principal OVERALL : 83.3 % of all payments went to interest/fees, only 16.7 % to principal This allocation is extreme and suggests : Payments may not be applied according to the original loan terms Servicers may be using payment application methods that maximize their profit at borrower expense The multiple servicer transfers ( XXXX XXXX XXXX MOHELA ) may have resulted in improper accounting or systematic errors Interest may be compounding more frequently than disclosed in original agreements I have maintained consistent payments for the past 5 years with NO missed payments. My current monthly payment is {$1300.00}, auto-debited from my checking account. Despite this perfect payment record and substantial monthly amounts, my principal barely decreases while interest continues to accumulate. 
Payment History Details : Payments have ranged from {$540.00} ( XX/XX/XXXX, end of last deferment ) to {$1400.00} Current payment : $ XXXXmonth via auto-debit Five consecutive years of on-time payments ( XXXX ) Total of 14+ years of payments since XXXX 4. COSIGNER DEATH AND FAILURE TO PROVIDE REQUIRED DISCLOSURES My Smart Option Student Loan ( account ending in XXXX ) had a cosigner, XXXX XXXX, who passed away on XX/XX/XXXX. 
Critical Timeline and Facts : XXXX School Year : XXXX XXXX DENIED XXXX XXXX as a cosigner for additional loans due to his illness. This proves XXXX XXXX had knowledge of his deteriorating health and created an official record of his medical condition. 
XX/XX/XXXX : XXXX XXXX passed away. 
Post-Death : I notified XXXX XXXX of my cosigner 's death. I was NEVER informed of any cosigner release options, policies, or alternatives. I was never provided any documentation about how his death might affect my loan obligations or whether any relief options existed. 
Ongoing Payments While Cosigner Was Ill and After Death : I made monthly payments on this loan even while I was still in school, as required by the loan terms, to reduce interest accrual. I continued making payments throughout my cosigner 's illness and after his death, never receiving any guidance about my rights or options. 

Violations I Believe Occurred : 1. Failure to Disclose Cosigner Release Policies : Many private student loan lenders, including XXXX XXXX, have had cosigner release policies that allow release upon death. I was never informed whether such a policy existed or how to apply for it. 

2. Failure to Provide Required Death-Related Disclosures : Upon being notified of a cosigner 's death, servicers have obligations under various consumer protection laws to disclose how this affects the loan and what options may be available.

3. Knowledge of Illness Without Proper Disclosure : XXXX XXXX 's XXXX denial of my cosigner due to illness proves they knew he was medically compromised. They had a duty to inform me of any policies related to cosigner release, particularly given their knowledge that he might not survive the loan term. 

4. Continued Aggressive Collection Despite Cosigner Death : After my cosigner 's death, the servicers ( XXXX and then MOHELA ) continued aggressive collection practices, including the XXXX years of forbearance with massive interest capitalization, without ever addressing the cosigner death or offering any related relief. 
I request full investigation into : Whether XXXX XXXX, XXXX, or MOHELA had cosigner release upon death policies that were not disclosed to me Whether their knowledge of my cosigner 's illness in XXXX obligated them to provide specific disclosures Whether I was denied rights or relief I was entitled to under the loan agreement or consumer protection laws Whether the continued aggressive interest capitalization after cosigner death constitutes exploitation 5. MULTIPLE SERVICER TRANSFERS AND ACCOUNTABILITY GAPS My loans have been transferred twice, creating numerous opportunities for errors and loss of accountability : XXXX : Original loans with XXXX XXXX XXXX XXXX Transfer from XXXX XXXX XXXX XXXX XXXX : Transfer from Navient to MOHELA Each transfer creates opportunities for : Payment tracking errors and misapplication Loss of documentation regarding cosigner death and related rights Improper accounting of principal vs. interest Failure to honor previous agreements, disclosures, or forbearance counseling obligations Gaps in accountability for predatory practices Specific Concerns : Was information about my cosigner 's death properly transferred to each new servicer? 
Were payment histories accurately maintained across transfers? 
Did each servicer properly account for all capitalized interest events? 
Were late fees during the XXXX forbearance period legitimate, or were they errors created during servicer transitions? 
I request a complete audit of my payment and account history across all three servicers to identify any errors, omissions, or violations that occurred during or after these transfers. 

DEVASTATING PERSONAL AND FINANCIAL IMPACT This situation has destroyed my financial life and future : Housing : I can not qualify for a home loan. This debt-to-income ratio makes it impossible for me to purchase a home, forcing me to continue renting and losing the wealth-building opportunity of homeownership. 
My Children 's Future : I am unable to save for my children 's education. Having experienced this nightmare myself, I desperately want to help them avoid student loan debt, but these payments prevent me from saving anything meaningful for their futures. 
Retirement Security : I can not save adequately for retirement. I had planned to max out my XXXX XXXX  contributions each year, but these loan payments have made that impossible. I am now years behind on my retirement savings goals and face the prospect of working far longer than I planned or retiring in poverty. 
Personal Relationships : This debt has damaged my ability to have meaningful personal relationships. I am terrified when someone suggests doing something that costs money. The constant financial stress and inability to participate in normal activities has isolated me socially and created anxiety around basic social interactions. 
Physical and Mental Health : I work 6 days a week most weeks just to make these payments and save a small emergency fund in case my car breaks down or an appliance fails. This grueling schedule leaves no time for rest, self-care, or enjoying life. The stress is constant and overwhelming. 
The Cruel Mathematics : After XXXX years of payments, during which I have : Made every payment for XXXX consecutive years without a single missed payment Paid {$100000.00} ( nearly {$35000.00} MORE than I borrowed ) Worked 6-day weeks to afford these payments Sacrificed homeownership, retirement savings, my children 's education funds, and my personal wellbeing I now owe {$110000.00} - nearly {$48000.00} MORE than I originally borrowed. 
I have done everything asked of me. I have paid faithfully. I have worked myself to exhaustion. And I am drowning deeper every year. 
This is not merely a financial problem- it is a complete destruction of my ability to build a stable, secure life for myself and my family. The practices of these servicers have not just cost me money ; they have stolen my future. 

DOCUMENTATION I have the following documentation to support my complaint and am prepared to provide it upon request : Complete payment history for all three loans showing dates, amounts, and principal vs. interest application Payment records showing consistent payments and payment amounts ranging from {$540.00} to {$1400.00} Records showing forbearance/deferment period from XX/XX/XXXX through XX/XX/XXXX Records showing capitalized interest events and late fees during this period Documentation showing grace period ended XX/XX/XXXX Records of auto-debit payments from checking account Current account statements showing balances of {$36000.00}, {$52000.00}, and {$30000.00} Documentation of cosigner XXXX XXXX 's death XXXX XX/XX/XXXX Records indicating XXXX XXXX denied XXXX XXXX as cosigner in XXXX due to illness Documentation showing I notified XXXX XXXX of cosigner 's death Records of servicer transfers : XXXX XXXX ( XXXX XXXX XXXX XXXX  ( XXXX ), MOHELA ( XXXX )

Company response to consumer: Closed with explanation