Consumer complaint received 2024-09-03 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: Nelnet, Inc.
State: MO

Complaint narrative:
I am filing this complaint against Nelnet , Inc. and its affiliates ( together " Nelnet '' ) regarding its servicing of my federal student loans. Nelnet has engaged in deceptive and unfair practices that have caused financial harm to me and potentially other borrowers. Specifically, I believe Nelnet is purposefully making its website difficult to use, wrongfully advancing borrowers due dates, and creating conditions that allow for increased accrual of interest, all of which financially benefit Nelnet at the expense of borrowers. 

XXXX. Advancing Due Dates Without Authorization : Previously, Nelnet provided an option labeled " Do not advance my due date '' each time a borrower made an additional payment on their student loans. This option has since been removed, and now Nelnet only offers the option to provide " special instructions '' that apply to a borrowers entire account by checking a box that says, " Do not advance my due date more than one month when I pay more than the current amount due. '' I have checked this box and submitted my special instructions multiple times. However, each time I log back into the website, I find that the box has been unchecked, and my due date continues to be advanced every time I make an additional payment. As a result, when my automatic payments are processed, they are not applied to the loans on which I have made additional payments. This practice is detrimental to borrowers because it allows interest to accrue on a higher balance for a longer period of time, thus financially benefiting Nelnet at the expense of borrowers. 

For example, I currently have a loan where the accrued interest is higher than the required monthly payment. If I do not make additional payments, my required payments will never go toward reducing the principal, and I will be unable to pay off the loan. Because Nelnet continues to advance my due date each time I make an additional payment, my automatic payments do not get applied to the loans on which I have made additional payments, causing interest to continue accruing on a higher balance. 

2. Inflexible Automatic Payment Dates : Additionally, Nelnet does not allow borrowers to choose the date of their automatic payments, and these automatic payments are frequently debited after the due date. 

This once again allows a longer period for interest to accrue on a higher balance than if payment had been made on the due date. Nelnet offers a 0.25 % interest rate reduction for borrowers who sign up for automatic payments, but this appears to be a ploy to entice borrowers into automatic payments, which in practice, are designed to benefit Nelnet through an increased interest accrual period and the complaint above regarding advanced due dates. 

XXXX. Frequent Website Downtime : Finally, Nelnets website is frequently down, making it difficult for borrowers to make timely payments. This technical unreliability further exacerbates the issues mentioned above, providing additional time for interest to accrue on unpaid balances.

Conclusion : Because deceptive practices by Nelnet are unfair and financially harmful to borrowers, I respectfully request that the CFPB investigate Nelnets practices and take appropriate action to ensure that borrowers are treated fairly and that their payments are applied in accordance with their instructions.

If clarification or additional information is necessary to advance this complaint, please contact me.

Sincerely, Borrower

Company response to consumer: Closed with explanation