Consumer complaint received 2025-11-25 00:00:00
Product: Student loan — Private student loan
Issue: Dealing with your lender or servicer — Received bad information about your loan
Company: MOHELA
State: VA

Complaint narrative:
Subject : Predatory Private Student Loan Servicing Improper Forbearance Steering, Misrepresentation, and Illegal Interest Capitalization ( XXXX XXXX XXXX MOHELA ) To the Consumer Financial Protection Bureau, I am filing a complaint regarding my private student loans originally issued by XXXX XXXX between approximately XXXX while I was a student at Virginia XXXX, later serviced by XXXX, and currently serviced by MOHELA. 

These loans appear to be XXXX XXXX XXXX XXXX private loans, which were widely marketed as federal-style loans despite being private, high-interest products. Over the years, I have paid back far more than I originally borrowed, yet the balance continues to grow due to improper servicing practices. 

I am requesting a full account review because I believe I was subjected to multiple predatory and illegal practices, including : 1. Improper and deceptive forbearance steering Whenever I experienced financial hardship, I was pushed into forbearance by the servicer instead of being offered any form of affordable repayment option. At the time, I did not understand what forbearance actually was or the long-term cost. 
I was told forbearance was my best option. 
I was not told that there were alternate repayment structures. 
I was not informed how interest would accrue or capitalize. 
I was not informed this would dramatically increase my balance. 

This exact practice was cited by the CFPB and 39 state attorneys general as an illegal servicing tactic in the XXXX XXXX settlement. 



2. Repeated, aggressive, and possibly illegal interest capitalization Because I was placed into forbearance repeatedly, interest accrued and was then capitalized multiple times, which caused the principal to explode far beyond what I borrowed. 

I believe this may include : improper capitalization capitalization during ineligible periods capitalization related to servicer error capitalization not properly disclosed I was never given a clear explanation of how much interest would capitalize or how often. 



3. Misrepresentation of the loans as federal-type financing When I took out the loans at Virginia XXXX XXXX they were marketed and presented to me as federal-style student loans or as loans that functioned like federal loans. I later learned they were actually private XXXX XXXX XXXX XXXX, one of the loan products identified as predatory in enforcement actions. 

Had I known the true nature of the loan, the lack of protections, or the actual long-term costs, I never would have borrowed them in this form. 



4. Servicer transfers have caused additional errors and confusion My loans were transferred through multiple servicers : XXXX XXXX XXXX MOHELA Each transfer resulted in : lost documentation inconsistent balances changes in how interest was calculated lack of disclosure about repayment options confusion about what plan I was on no communication about alternatives other than forbearance Given the history of these companies, I am concerned that errors have compounded over time. 



5. Possible violation of cost-of-attendance lending limits During my time at Virginia XXXX, I believe portions of the loan may have been used for living expenses beyond the schools official cost of attendance. If XXXX XXXX lent more than the XXXX, then portions of these loans would legally be non-qualified education loans, which should not be treated as protected private student loan debt and are subject to dispute. 



Requested Resolution I am requesting : 1. A full servicing and accounting audit of my loans from origination to present.

2. A review of all interest capitalization events for legality and compliance.

3. Correction or reversal of any improper capitalization or forbearance steering harm. 
4. Clarification of whether my loan type qualifies for relief programs under the XXXX settlement. 
5. Removal or adjustment of any portions of the loan that were non-qualified education loans.

6. Any additional consumer relief or balance corrections required under federal law. 



Summary I borrowed these loans in good faith. Over the last XXXX years, I have paid back far more than the original principal. Yet due to predatory loan terms, inappropriate forbearance steering, and repeated capitalization, my balance has grown to a level that feels both unfair and financially abusive. 

I am asking for the CFPB to investigate these practices and require the servicer ( s ) to correct any errors, misconduct, or illegal servicing actions. 

Thank you for your attention to this matter.

Company response to consumer: Closed with explanation