Consumer complaint received 2026-04-30 00:00:00
Product: Student loan — Federal student loan servicing
Issue: Struggling to repay your loan — Problem with your payment plan
Company: MOHELA
State: MD

Complaint narrative:
Since graduating from XXXX XXXX in XXXX, I had been certified under the Pay As You Earn ( PAYE ) plan, an Income Driven Repayment ( IDR ) plan offered to many borrowers. My payment was {$170.00} per month. From XXXX to XXXX, I properly applied for recertification under the PAYE plan, and was recertified. My payment remained {$170.00} per month throughout that period. I have never missed a payment and, as far as I can recall, have never made a late payment. On XX/XX/XXXX, I received a letter from my loan servicer, Mohela, regarding my XXXX application for recertification. This letter stated that my application for recertification had not been approved. I have attached this letter to this complaint ( XXXX XXXX XXXX Mohela Letter - IDR Request Denied ). Without this IDR plan, my minimum payment would have increased to approximately {$1700.00} per month. I was a remain completely financially incapable of making a month payment of that amount. Either that same day or in the days immediately following, I contacted Mohela by phone, requesting more information about the denial, and I was informed that, due to the recent Big, Beautiful Bill, borrowers were required to prove a financial hardship to qualify for the PAYE plan. Despite living paycheck to paycheck, I was told that I did not qualify for a financial hardship. However, the Mohela representative encouraged me to apply for an Income-Based Repayment Plan ( IBR ). She said that this plan used a similar calculation for payments as the PAYE plan, and seemed optimistic that my payment would remain the same as they were. Unfortunately, I do not recall the name of the Mohela representative I spoke with. Thereafter, I applied for the IBR plan as suggested by the Mohela representative. During the application process, the XXXX XXXX XXXX website provided an estimate of my new monthly payment under the IBR plan, estimating that my new payment would be {$780.00} per month. This would represent a 460 % increase from my previous payment of {$170.00} per month. Despite this estimate, I relied on the representation made by the Mohela representative that my payment would be the same as it had been under the PAYE plan, and applied for the IBR plan. While I was relying on the representation made by Mohela, I also knew that I could not afford to meet the Standard Repayment Plan payment of approximately {$1700.00} per month, and recognized that I had no choice but to apply for the IBR plan even if the payment would increase to {$780.00} per month. On XX/XX/XXXX, I received a letter from Mohela stating that my application for the IBR plan was accepted. This letter stated that my new monthly payment would be {$780.00} per month. I have attached that letter to this complaint ( XXXX XXXX XXXX Mohela Letter 1 - New Monthly Payment ). I was extremely disheartened by the fact that my payment had not remained the same and had increased by 460 %. While I was aware that this was possible, I remained hopeful based on Mohelas representation that my payment would likely stay the same as it was under the PAYE plan. However, as noted previously, I had no choice but to accept this increased payment, as remaining on a Standard Repayment Plan was not financially possible. Also on XX/XX/XXXX, after receiving the letter with my new payment, I received a second letter from Mohela, providing details about the schedule of my loan repayment. Much to my surprise, this letter stated that my payment would be {$780.00} per month for the next 12 months, and then increase again to {$990.00} per month. {$990.00} per month would reflect a 584 % increase in my previous minimum payment amount over the course of one year. No explanation was provided for why my payments were set to increase after 12 months, and this increase in my payment amount did not appear to be tied to my income. I have attached that letter to this complaint ( XXXX XXXX XXXX Mohela Letter 2 - Repayment Schedule ). This 584 % increase in my payment amount is unconscionable. I have a two and a half year old daughter and am the primary income-earner for her and my wife. Like many other Americans, I also have to make payments for my mortgage, my wifes car loan, and credit card debt. This is taking place in an environment of increasing inflation and rapidly rising prices across the economy. I am not financially capable of making these payments. Mohela is also engaging in predatory practices. As mentioned, I had no choice but to apply for this new plan, because, otherwise, my minimum payment would have increased to {$1700.00} per month, which, as stated above, I am not financially capable of making. In applying for this plan, I relied on the representations made by Mohela that my payment would likely remain the same as it was. I began my career as an XXXX XXXX XXXX and now work for the XXXX XXXX XXXX. Aside from approximately XXXX years of my career, I have worked in public service positions, making less money than I might in the XXXX XXXX, in hopes of taking advantage of Public Service Loan forgiveness. I still have approximately XXXX years of payments to make under that plan before I would be eligible. Under this new repayment plan, I will pay approximately {$45000.00} over the next XXXX years, as opposed to {$8100.00} under my previous repayment plan. That is a 553 % increase in the total amount of payments. As stated previously, I have never missed a payment since graduating from XXXX XXXX nearly XXXX years ago. Despite this, my loan balance has only increased since graduation. Had I been aware that my minimum payments would eventually become completely unaffordable, I would not have opted to work in public service positions, and would have instead pursued more lucrative opportunities in the private sector that would have allowed me to pay off my student loans in their entirety in a timely manner.

Company response to consumer: Untimely response