Consumer complaint received 2024-12-03 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: IN

Complaint narrative:
I have been in an administrative forbearance with a 0 % interest rate since XX/XX/year>2024. Despite the 0 % interest rate, interest accrued at the normal rate resulting in incorrectly accrued interest and incorrectly applied payments. I requested a full payment history and with the billing statements was able to determine what the correct interest should have been. The XX/XX/scrub> 2024, billing statement contained the correct totals when the 0 % interest rate started. The XX/XX/year>2024 billing statement reflects the wrongly accrued interest. I have made payments since the XXXX billing statement. The correct totals should be as follows : Loan XXXX : Total interest- {$1400.00}. Current Principal- {$22000.00}. 
Loan XXXX : Total interest- {$1200.00}. Current Principal- {$20000.00}. 
Loan XXXX : Total interest- {$110.00}. Current Principal- {$6600.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$3400.00}. 
Loan XXXX : Total interest- {$220.00}. Current Principal- {$24000.00}. 
Loan XXXX : Total interest- {$64.00}. Current Principal- {$20000.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$8000.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$4500.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$5400.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$11000.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$10000.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$5300.00}. 
Loan XXXX : Total interest- {$0.00}. Current Principal- {$10000.00}. 
MOHELA sent a message in response to my complaints informing me that interest accrues during a forbearance due to the set interest rate. My interest is 0 %. $ XXXX. Any number multiplied by 0 will always be zero. How is interest accruing at the normal rate when the interest is 0 %? Interest should not be accruing and should not have accrued since XXXX, 2024. As a result of interest accruing at the normal rate instead of the 0 % rate, my interest is incorrectly accruing so payments are not correctly applied to the loans. I have been dealing with this issue since XXXX and need it rectified. I can not rectify the accounts for MOHELA. I have called to have this rectified over 20 times and have been told it will be corrected. Instead of the issue being fixed, I received a letter explaining how interest accrues due to the set interest rate. Again, the set interest rate has been 0 % since XXXX which means {$0.00} in interest should have accrued since XXXX. I need this corrected. 
Additionally, I have directed MOHELA to apply overpayments to the principal balance first, not the interest. Despite directing MOHELA to apply all overpayments to the principal balance, they do not. The aim of reducing the principal balance is to reduce the total accrued interest which is capitalized to the principal. Not allowing people to pay towards the principal balance because there is outstanding interest increases the total accrued interest which is capitalized and increases the total principal, this increasing the amount paid back by the borrower. This should not be allowed. If anyone wants a chance to pay of the loans, this predatory servicing must be stopped.

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