Consumer complaint received 2025-04-23 00:00:00
Product: Student loan — Federal student loan servicing
Issue: Dealing with your lender or servicer — Received bad information about your loan
Company: MOHELA
State: MI

Complaint narrative:
I am currently employed by XXXXXXXX XXXX XXXX in XXXX as a XXXX XXXX I attended XXXX XXXX  in Michigan and used federal loans to finance my education. I am having an issue with my loan servicer Mohela where thousands of dollars of mistakenly-applied interest is not being removed from my loan balance despite repeated attempts to correct the situation. I have copies of all correspondence relevant to the dates and amounts listed below, and would be more than happy to provide copies upon request, if necessary. 

I consolidated my loans and applied for IDR/SAVE on the first date possible, XX/XX/XXXX. My consolidation was quickly approved, and my consolidated loan was disbursed to Mohela on XX/XX/XXXX, in the amount of {$290000.00}. The IDR/SAVE application remains pending to this day. 

Due to the original court injunction on XX/XX/XXXX my loans were placed into processing forbearance due to the pending IDR/SAVE application. According to the FSA government website, processing forbearance can last a maximum of 60 days, after which any loans associated with a pending IDR/SAVE application shall be transitioned to a general forbearance by the loan servicer. Per the FSA, loans in processing forbearance accrue interest, whereas loans in general forbearance do not. This was confirmed in an email I received from studentaid.gov on XX/XX/XXXX stating that interest will not accrue during this forbearance, and additionally from a letter Mohela sent me dated XX/XX/XXXX that states while you are in this forbearance no payment is required on your account and your interest rate will be set to 0 %. 

Despite these clear and unambiguous policies/statements from FSA and Mohela itself , interest has been accruing rapidly on my loan since it was disbursed to Mohela on XX/XX/XXXX. As of today, XX/XX/XXXX, my Mohela account shows {$13000.00} of interest accrued, for a total amount due of {$310000.00}. Interestingly, the letter from Mohela that states my loans are now in interest-free forbearance from XX/XX/XXXX was dated far in excess of the 60-day maximum the processing forbearance was supposed to expire and be converted to the interest-free general forbearance. If the start date of the processing forbearance was the date of application ( XX/XX/XXXX ), 60 days after that would be XX/XX/XXXX, if the start date was when the loan was disbursed to Mohela ( XX/XX/XXXX ), 60 days later would be XX/XX/XXXX, and finally, if the start date was the day of the injunction ( XX/XX/XXXX ), 60 days later would be XX/XX/XXXX ; suffice to say even the most liberal estimate of when the interest-free period should have begun was far before Mohela notified me in XXXX of XXXX that my loans were now interest-free. But it is a moot point regardless despite Mohelas letter in XXXX XXXX, interest has been consistently accruing even after that point. 

I have called Mohela 4 times to renew my forbearance since I graduated and have spent well in excess of 24 hours on hold to do so. Several attempts in the last week to correct my loan balance and remove the false interest ( {$13000.00} ) have been totally unsuccessful. Even when calling at XXXX when the customer service center opens, I am transferred between many different departments, with waiting times of 3-4 hours between each transfer, that is if the call doesnt spontaneously drop, which has happened many times. I work full-time and for near minimum wage. I can not afford to take an entire week off of work to deal with Mohelas incompetence. Even more insulting to the American tax payer is that I would love to start making payments on the loan as I am able, but any payments I would make would first be applied to the nearly {$14000.00} of interest that I do not rightfully owe, not the principle. 

Please help me in dealing with Mohela so that this huge burden of mistakenly-applied interest is removed from my loan. 

Thank you.

Company response to consumer: Closed with explanation