Consumer complaint received 2024-07-26 00:00:00
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Don't agree with the fees charged
Company: Maximus Federal Services, Inc.

Complaint narrative:
Hello! 

I XXXX XXXX XXXX XXXX in XXXX, for which I took out several federal student loans. In XXXX, my loans entered their grace period, meaning that no payment is due, but that the loan continues to accrue interest. I applied to consolidate my loan so that I could enter an income driven repayment program, which would have lowered my interest payments to {$0.00}. I applied to have ALL of my loans consolidated into XXXX new loan, so that I could exit the grace period and enter the XXXX. 

In XXXX, I received a letter from my servicer, Aidvantage, stating that my application for consolidation had been approved. Naturally, I assumed that this was for all of my loans, since that was what I had applied for. A couple of weeks later when XXXX application was approved, though, I noticed that one of the loans was still in grace, not consolidated, and not on the income driven repayment plan. 

Presumably, this is due to a clerical error on the part of the servicer. I reached out to the servicer to ask what was going on. They told me that one of the loans had not been consolidated, without giving a reason why. I asked them how I could rectify the situation. They told me that I could apply to have the remaining loan consolidated. 

Because I have applied for a loan consolidation in the last 180 days, XXXX  rules mean that I can not apply for another consolidation online. As a result, I either have to wait 180 days or submit a paper form to the servicer. I live in the XXXX XXXX, and snail mail takes a while. The servicer always moves slowly, but I am sure that their ability to manage paper documentation is not especially speedy. 

In the meantime, the un-consolidated loan ( for close to {$25000.00} ) has continued and will continue to accrue interest ( at a more than 7 % interest rate ) if and until the servicer gets its act together and approves the application for consolidation I submitted months ago. 

When I spoke to a customer service agent at the servicer they told me there was nothing that could be done about this. No waiving of the interest accruing, or administrative forbearance in the meantime. 

To my mind, permitting this behavior encourages bad behavior among loan servicers at the expense of student borrowers. If I ultimately have to pay the accrued interest to the servicer, then the servicer will have made more money than they would have if they had processed my application correctly. This gives the servicer an incentive to create as many " clerical errors '' as possible, hope that borrowers do not notice, and then demand repayment for interest the borrower should have never accrued in the first place. 

I am lucky that I am a high-information borrower who knows how to make the relevant complaints. But I fear that for borrowers with less access to information and in more vulnerable positions, this kind of precedent allows for crooked behavior from student loan servicers.

Company response to consumer: Closed with explanation