Consumer complaint received 2024-02-16 00:00:00
Product: Student loan — Private student loan
Issue: Dealing with your lender or servicer — Trouble with how payments are being handled
Company: TRANSWORLD SYSTEMS INC
State: CA

Complaint narrative:
To whom it may concern : My name is XXXX XXXX, and I am a resident of XXXX XXXX. I have proof that for the last XXXX  years, at least, University Accounting Service ( UAS ) has been willfully and knowingly deceiving its customers into paying thousands of dollars above and beyond what they should have been paying for student loans. The proof of this allegation can be seen in my own account. 

Since XXXX, UAS has been the loan service provider for a private student loan I took out as a XXXX XXXX in XXXX. In XXXX, after I XXXX XXXX XXXX and my repayment period started, I was provided with a bill that included the following information : Original Loan Amount : {$5000.00} Current Principal : {$5000.00} Previous Balance : {$7500.00} Current Balance : {$7500.00} Total Amount Due : {$81.00} When I had the funds to pay the bill, on XXXX XXXX, XXXX, I paid a total of {$160.00} {$8.00} went to late fees and {$150.00} went toward interest. A second payment of {$85.00} was made XXXX XXXX, XXXX, of which UAS said {$40.00} went to interest and {$44.00} went toward the principal. However, in the statement issued XXXX XXXX, XXXX, which included both of those payments, the current principal was still listed at {$5000.00}. 

The current principal balance of {$5000.00} did not start to decrease until the statement dated XXXX XXXX, XXXX. By that point, UASs own records show that I had paid nearly {$2500.00} toward the principal. How could that be if the principal amount on my account had not decreased a single cent since I started repayment? 

As of XXXX XXXX, XXXX, I have paid a total of XXXX on a {$5000.00} loan XXXX in interest and XXXX in principal and UAS says I still owe roughly {$1500.00}. How can that be if the principal when I started repayment was {$5000.00}? 

I called UAS about this issue XXXX XXXX XXXX XXXX XXXX XXXX to request a review of my account. XXXX XXXX  later, I called back to check on that review and spoke to a manager who said that the interest that accrued on my account during its original deferment period while I was still in XXXX  had capitalized and become part of my principal balance, meaning the principal when I started repaying was roughly {$7500.00}. 

However, nothing in the documentation that I received from UAS indicated that this had occurred. On the very first statement I received, the following note about accrued interest is included : If you have a deferred principal plan, any amount of interest that is not paid may be capitalized. If you are unable to pay the full amount of interest accrued, you may make a partial payment or none at all, and the remaining accrued interest may be capitalized. If your account is set-up for deferred principal payments and the interest remains unpaid and becomes delinquent, that interest may be capitalized. When interest is capitalized, it is added to the current principal balance and subject to future interest charges.

As we all know, the word may does not mean will, and that if there is no other indication that the interest had capitalized ( i.e. the current principal amount included on the statement did not include a capitalized amount ), then it should be safe for a customer to assume that the interest had not, in fact, been capitalized.

But, despite my belief that I was simply paying down the original loan amount as well as the interest that had accrued, UAS was charging interest on the entire roughly {$7500.00} instead of the {$5000.00} that was listed on my statements costing me thousands of dollars in the process and extending my payment period far beyond what it should have been.

This practice is deeply deceptive, predatory and keeps borrowers in debt for far longer than they should be. Like I said above, I have paid more than {$13000.00} on this {$5000.00} loan and am being told that I still owe more. If thats not the definition of a predatory practice, I dont know what is.

Im hoping that your office can investigate this matter thoroughly and put an end to predatory debt collection practices such as those employed by UAS. 

Sincerely, XXXX XXXX

Company response to consumer: Closed with explanation