Consumer complaint received 2023-05-10 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: CA

Complaint narrative:
Summary of Events Overview The crux of this matter is that MOHELA errantly sent two checks totaling {$49000.00} to a now defunct organization without my approval or consent. In so doing, they sent checks into the void that got cashed and they now claim that I owe them that money, despite this being their mistake. To make this right, I demand that the balance of my account be reset to the rightful amount, being {$13000.00}. A reduction of {$54000.00} from the current amount of {$68000.00}. The full summary of events is as follows. 

Original Loan Amounts My original balance with MOHELA was {$100000.00} at original principal. This amount went up as some of these loans accrued interest over the years they were held by MOHELA. 

XX/XX/XXXX - I refinanced my federally held student loans with XXXX. After paying off what I could of the MOHELA loans, I had a balance of {$58000.00} remaining. While interest rates were good, I chose to refinance with a non-federal institution - XXXX. This process went smooth and nothing went wrong. 

XX/XX/XXXX - After the Student Loan Forgiveness plan was announced, I had friends telling me that, since I had paid down my federal loans in the period of the pandemic, I could call into my federal loan servicer ( MOHELA ) and request a refund of {$10000.00} ( the maximum that I could be forgiven under the loan forgiveness plan ) and then that {$10000.00} would be forgiven if the Student Loan Forgiveness plan were to be enacted. I called in to MOHELA on XX/XX/XXXX to request the refund of {$10000.00} so that amount would be forgiven when the Student Loan Forgiveness plan went into effect. 

While on the phone with the MOHELA representative, I explained that I was seeking a refund to a voluntary payment made during the pandemic of {$10000.00}. I did not want more than {$10000.00}, as {$10000.00} was the maximum that could be forgiven. When I explained this, the representative was happy to oblige and told me that others had been doing the same. She told me I would see the {$10000.00} in my bank account in the next 30 days or so. 

XX/XX/XXXX - Around 30 days after this, I was surprised to start receiving several small payments from the Department of the Treasury into my bank account. These deposits totaled {$3800.00}. I was a little confused why they didnt go all the way up to the {$10000.00} I requested. But I decided to wait to give it a few more days since I had initially been told it would be 30. 

A few days later ( not sure of exact date ) I got a check in the mail from the Department of the Treasury for {$65000.00}. This came as quite a surprise, as I had only requested {$10000.00} to be refunded. I can not remember if I called in to ask about the amount at this point and what I should do with it, but I believe I did. At this point, I logged into my MOHELA account and noticed that the total balance it said I owed was now up to the total amount I had received, plus an additional {$49000.00}. I was super confused because I didnt know where that money had gone and I was attempting to pay it back to MOHELA XXXX minus the {$10000.00} I had requested. 

After calling in to MOHELA multiple times and waiting on several hours ( approx 6 ) of holds, I finally got through to someone who explained to me where the other money was. Since I had refinanced, that money had been paid back to XXXX. I was directed by MOHELA that it was now my responsibility to reach out to XXXX  and get them to pay back the {$49000.00} that MOHELA had errantly paid them. I asked if MOHELA could do this, since I was just the borrower and didnt have relationships with these other financial institutions, but they told me it was my responsibility. I was upset at this, since I had only requested {$10000.00} and now was being tasked with hunting down the money that I did not request and was errantly paid to XXXX. 

When I called XXXX, I learned that XXXX no longer existed. They had been replaced by a different company, XXXX XXXX, who now held my loans. I explained the situation to them and they said that there was little they could do, but they would do a full audit and see if they could track down the checks. They ended up not being able to hunt down and the checks and said that they were not showing in their systems as having been cashed so they were unwilling to write the check back to MOHELA. 

I reached back out to MOHELA to explain the situation to them. After many more hours of waiting on hold, I was told that they would have to do some digging to see if the checks were cashed and that they would get back to me. I finally received a response on XX/XX/XXXX that the checks had in fact been cashed. But I couldnt see any details. I was told that I would need to take this proof back to XXXX and ask them to recut the checks to MOHELA to make up for the amount that MOHELA had errantly paid them. I protested and asked that they do this themselves, since I was not well-suited to be the one driving this matter forward. But they told me I was responsible to do so, so I did. 
I took the checks to XXXX and explained what I had been told by MOHELA. XXXX then directed that they would do further research into the matter and see what they could learn. About a month later, they called me back and told me that they didnt have a record of the checks but could clearly see they were cashed. They suggested I call XXXX XXXX, the bank that was listed on the check as having cashed it, and see who had cashed it. I was extremely frustrated at this point as there was no way anyone at XXXX was going to tell me who had cashed the checks since I was listed nowhere on the checks. But even so I did it. When I called, I was told that I could not be furnished that information since I was not on the check or an account holder and I would need to contact the account holder. 

XX/XX/XXXX - Then I reached back out to MOHELA to try and get the whole matter resolved. They told me that again, they would do research. Instead of wait, I decided to try and get both MOHELA and XXXX on the phone at the same time. In the course of so doing, I was continually told that I had requested the full refund, which was flatly false. I had requested only {$10000.00} to be refunded. I was never informed that I could only receive all payments made or no payments made as a refund at any point during my initial call with MOHELA. And, even if I had been, they still errantly paid {$49000.00} to a company that no longer exists and are holding me accountable for their error. After hours, I was finally able to do so and asked them to work this out so I could get on with my life. XXXX claimed they couldnt find the money because MOHELA had sent the check incorrectly to a now-defunct organization. MOHELA claims that none of that matters and that I owe them the money. After all of this, I asked what the next step was after being escalated to their corrections department at MOHELA. The representative told me that the time had come for litigation, because they would not expunge the debt until forced to do so and XXXX remained unwilling to pay. I can not believe that a student loan servicer told me that I would have to sue them in order to right my balance and make up for their multiple misdeeds in this entire process. 

As a result of all of this, my credit score has taken a hit for having an extra {$49000.00} of debt that I do not have. In addition, I have wasted countless hours, had to take time off from work, and more to deal with this. Not to mention the stress and anxiety this has all caused me so far. On top of it all, MOHELA still will not expunge the {$49000.00} that they show I owe until I sue them to do so. 

My MOHELA balance now shows that I owe {$68000.00} to them. Which is not the case. Im not sure where this interest is coming from, but the maximum I would possibly owe to them would be {$18000.00}, but even that does not make sense. I paid them back all but {$10000.00} of the check they wrote me and kept the additional {$3800.00} that was paid to me in direct deposits. As such, I should only owe them {$13000.00}. 

Attached to this complaint is a summary of events with images and a copy of the checks that MOHELA sent to XXXX showing they have been cashed.

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