Consumer complaint received 2025-04-30 00:00:00
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Received bad information about your loan
Company: Nelnet, Inc.
State: NE

Complaint narrative:
I have XXXX XXXX  that are in the process of being discharged due to misconduct by my school. This process is called borrowers defense, and applies to my loans from the XXXX XXXX. I have attached the emails regarding notification of this matter. According to the Department of Education and Nelnet, this process can take many years. In addition, there is no where I can go as the borrower to see the progress or status of this process. During this process, there should be no negative consequences or impact on me as the borrower. Part of the process for the discharge is a refund of all payments made towards the loans. Due to multiple changes in servicers over the years and the fact that my loans were consolidated, there was very little information available about the specifics of these loans from the very beginning of the process. I previously asked Nelnet in late XXXX for a record of all payments and loans- and I was told at that time that the information was unavailable due to the processing of the borrowers defense case. They did inform me that I would be getting a refund of approximately {$600.00}, which is the full amount they said I paid on these loans in over 10 years. I had serious doubts about that amount, but had XXXX recourse to prove otherwise. They informed me that the payment would be coming from the XXXX Treasury and provided instructions on how to sign up for direct deposit through the IRS website. I enrolled in direct deposit, and on XX/XX/XXXX, I received a deposit in the amount of {$690.00} from the XXXX Treasury. Due to not expecting any other payment, I contacted Nelnet and they confirmed that this is the refund for my borrowers defense case. They informed me that the Department of Education would be sending correspondence to confirm this, but nothing was received. I had spent another few hours at this point between calling Nelnet and the Department of Education, and I let it all go assuming itd all be made clear when the process was complete. 

I enrolled in school for the winter of XXXX ( XX/XX/XXXX to XX/XX/XXXX ) with no issues, and all loans were put into a forbearance status due to being a XXXX XXXX XXXX. I was eligible for financial aid at this point. I took the next semester off, and began the process to enroll for XXXX XXXX. I am going to a different school, so I had to login to update my XXXX form at the beginning of XX/XX/XXXX. Upon logging into the Department of Education, there was a bold warning about my loans being in default. I immediately contacted the Department of Education - because my loans are absolutely not in default and even if they were, there is absolutely no way they could go from good standing in XX/XX/XXXX to default in XX/XX/XXXX due to the amount of time needed to get into a default status. The Department of Education informed me that Nelnet, as the servicer, of these loans is solely responsible for updating loan status. I was told to contact Nelnet. Upping logging into the Nelnet website, there is no information about any late payments, default status or record of the defaulted loans. They are not even reported on my loan history. I called Nelnet, and I was informed that the process of refunding payments during a loan discharge can put the loan into a erroneous status of default. They informed me that there was nothing they could do about this, and I had to wait for the borrowers defense case to be resolved and all information would be updated and made right at that time. I requested a supervisor, who reiterated that there was nothing they could do and that this was just part of the process. I informed them that due to being in a default status, I can not return to school and obtain XXXX XXXX, and there are serious consequences to my credit report. In addition, when the government returns to wage garnishments in XX/XX/XXXX, my wages will be garnished for a defaulted loan that I dont owe. Nelnet again told me they had no solution, and that I just had to wait. They were unable to provide any specific timeline, but did inform me that it will likely be a year or more before any update is made to my account. They informed me that this is because the Department of Education controls all processing and they generally take 3-5 years in total for a borrowers defense case. 

I filed a complaint with the XXXX Department of Education to attempt to resolve this matter in early XX/XX/XXXX, however there has been no resolution to date. I have attached records of my Nelnet account, Department of Education account, deposit of refund, and original emails informing me of approval of my borrowers defense case. There is no other correspondence available by either entity, nor any other correspondence sent to me.

Company response to consumer: Closed with explanation