Consumer complaint received 2026-04-08 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: NE

Complaint narrative:
I am writing this complaint regarding the misapplication of payments on my XXXX XXXX XXXX loans ( specifically loans XXXX and XXXX ), served by MOHELA. The lack of response to my repeated requests for a timeline, written confirmation of the corrections promised during our phone calls, explanations for the refusal to correct improper interest accrual citing legal grounds, and no itemized accounting is utterly unacceptable. This is a repeated request I have made for these issues over the course of 2 months. Timeline of events ( all dates verified via my records and MOHELA account history ) : XX/XX/year> : MOHELA posted an {$800.00} payment I made specifically allocated to loans XXXX and XXXX. XX/XX/year> : I refinanced loans XXXX and XXXX with XXXX XXXX XXXX XXXX XXXX Because MOHELA had not yet posted the {$800.00} payment, the payoff quote provided to XXXX XXXX did not reflect it. XX/XX/year> : MOHELA posted XXXX XXXX payoff payment of {$14000.00}, which was explicitly intended only for loans XXXX and XXXX. Instead, MOHELA incorrectly applied it across all of my remaining loans. XX/XX/year> : I called MOHELA to report the misapplication and requested reapplication of the XXXX XXXX funds to the correct loans only, plus refund of any overpayment to XXXX XXXX. I was told processing could take up to 90 days and that MOHELA had also refunded my original {$800.00} payment ( which I did not request ). XX/XX/year> : Follow-up call. MOHELA acknowledged the error was theirs, confirmed they would not reverse the erroneous {$800.00} refund ( which has caused additional interest to accrue on loans XXXX and XXXX ), but stated they would expedite reapplication of the XXXX XXXX payment to XXXX XXXX XXXX loans and that it would be completed within 10 business days- which at the latest, would have been XX/XX/XXXX. I specifically requested written confirmation of the interest correction and any resulting refunds/overpayment adjustments. XX/XX/year> : No updates visible on my account, no written correspondence received. I emailed requesting status update and written confirmation ( as quoted in my original message ). XX/XX/year> : MOHELAs response provided no specifics, no confirmation, no explanation regarding interest, and referenced up to 120 business days for any refund processing - unacceptable. XX/XX/year> : MOHELA has still provided no correspondence. I have not received the incorrectly refunded {$800.00} payment. My account and refinance payment have not been corrected despite exceeding the 10 business day threshold - by more than double. During multiple calls, MOHELA representatives repeatedly acknowledged this was a servicing error on their part - I'm sure they have the transcripts as all calls were stated to be recorded for training purposes. The erroneous refund of my {$800.00} payment ( which I never requested ) has caused improper interest accrual on loans XXXX and XXXX. The XXXX XXXX payoff was never applied as directed. I then demanded written confirmation and/or explanation of each item below within 3 business days- pursuant to MOHELA 's advertised response time : Immediate reapplication of the full {$14000.00} XXXX XXXX payment exclusively and fully first to loans XXXX and XXXX ( exactly as originally intended and directed ), with any amounts incorrectly applied to my other loans reversed and properly reallocated. A detailed, itemized written accounting showing the exact current balances on all loans ( including loans XXXX and XXXX ) both before and after the reapplication of the XXXX XXXX payment, clearly demonstrating proper allocation. Written confirmation that any overpayment/credit balance remaining after loans XXXX and XXXX are paid in full will be either ( a ) refunded directly to XXXX XXXX XXXX XXXX ( if applicable ) or ( b ) applied to my other remaining loan balances only after loans XXXX and XXXX are satisfied in full. Written confirmation that any additional interest that has accrued ( or will accrue ) on loans XXXX and XXXX as a direct result of MOHELAs erroneous and unauthorized refund of the XX/XX/year> {$800.00} payment a refund I never requested and which stemmed solely from MOHELAs servicing error will be reversed/waived in full, restoring the balances and interest to what they would have been had the error not occurred. If MOHELA is refusing to make this adjustment, provide a detailed written explanation of the specific legal or policy reason why you will not correct the interest accrual caused by your own servicing mistake. Status and expected delivery date of the {$800.00} refund ( still not received ). A full written payment history and detailed accounting of all transactions on loans XXXX and XXXX since XX/XX/year>. These corrections and explanations are required under 34 CFR 685.211 ( a ) ( Miscellaneous repayment provisions Payment application and prepayment ), which governs the proper application of payments and prepayments on Direct Loans, as well as MOHELAs contractual obligations to the U.S. Department of Education requiring accurate servicing and honoring of borrower-directed payment instructions. MOHELA must also comply with applicable Nebraska consumer protection laws prohibiting unfair or deceptive servicing practices.

Company response to consumer: Untimely response