Consumer complaint received 2024-06-12 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: NC

Complaint narrative:
Subject : Complaint Regarding Misapplication of Student Loan Payments by MOEHLA Dear Sir/Madam , XXXX am writing to formally lodge a complaint against MOEHLA ( Missouri Higher Education Loan Authority ) for their failure to correctly apply my recent student loan payment towards my loan balance. This issue has caused significant concern and inconvenience, and I am seeking your assistance in resolving this matter. 

Before I begin my complaint, I would like to give some background regarding my student loan history. It took me almost 20 years to complete my education, as I was working full-time mostly in non-profit or XXXX XXXX settings during my entire academic career. The student loans that I received helped me significantly and I would not have been able to afford higher education without them as I came from a financially challenged background. 

Like most student loan borrowers, I was impacted by the XXXX shutdown in XXXX and was laid off from work. Thankfully, student loan payments were on pause during this time. Once the pause ended, I began making my student loan payments again in XXXX of XXXX using MOHELA as the new student loan servicer. For the first 6 months, my payments of {$1400.00} were applied toward my student loan balance each month without any issues. In XXXX of XXXX, MOHELA sent out notifications that they were updating their system and that student loan borrowers needed to set up a new account with MOHELA. I followed MOHELAs instructions on setting up a new account, but my XX/XX/XXXX, payment was made using the old account number. After about a week, I noticed my XXXX payment had not been applied toward my student loan balance, so I called MOHELA to inquire about this issue. They stated that it would take a week for payments made on the old account to be applied to the new account. Subsequently, I had to call XXXX more times spending hours on the phone before MOHELA finally tracked down my XXXX payment and applied it toward my account balance. I was assured that the next months payments using the new system with my new account number would go smoothly. 

On XX/XX/XXXX, I made a payment of {$1400.00} towards my student loan account, using the new account number, with MOEHLA for XX/XX/XXXX. Despite the payment being processed and the funds successfully debited from my bank account on XX/XX/XXXX, I observed that this payment had not been applied to my loan balance. As of XX/XX/XXXX, my account statement still reflects the same balance as before the payment was made, in addition to compounding interest. 

I have attempted to resolve this issue directly with MOEHLA. I have contacted their customer service department multiple times, spending XXXX hours on the phone, sending emails, collecting and uploading bank statements, payment documentation, and writing complaints to MOEHLA . MOHELA claims they can not find my payment in their system. And to make matters worse, my payment history using my old account is not present in the new system. The only payment history is for XX/XX/XXXX. This is unacceptable. To date, have not received a satisfactory resolution for my XXXX payment. I have spoken with and had many email correspondences with numerous MOEHLA representatives, and customer advocates, I was assured that the matter would be addressed promptly, yet no corrective action has been taken, and the payment remains unaccounted for in my loan balance. I have subsequently stopped making payments until MOEHLA can account for payments received and correctly applied them toward my account balance. 

This misapplication of payments not only disrupts my financial planning but also impacts my credit report and overall loan repayment strategy. I believe that my rights as a borrower are being compromised, and I am deeply concerned about the lack of accountability and transparency displayed by MOEHLA in handling this issue. I submitted bank statements showing payment made, and a letter from my bank stating that MOHELA received my student loan payment of {$1400.00} via wire transfer on XX/XX/XXXX. They still have not applied my payment toward my student loan balance. Best case scenario MOHELA is guilty of incompetence, worst case scenario, student loan funds are being mishandled by MOHELA. 

Therefore, I am requesting the Consumer Financial Protection Bureau to conduct a thorough investigation into XXXX 's handling of my loan payments and to take appropriate action to ensure that my payment is correctly applied to my loan balance. I also urge you to review MOEHLA 's payment processing practices to prevent similar issues from affecting other borrowers. 

For your reference, I am enclosing the following documents : - A copy of a letter from my bank showing the payment to MOEHLA on XX/XX/XXXX. 
- Copies of email correspondence and complaints filed with MOHELA. 

I appreciate your attention to this matter and hope for a swift resolution. Please do not hesitate to contact me at XXXX or XXXX should you require any additional information. 

Thank you for your time and assistance. 

Sincerely, XXXX XXXX XXXX XXXX

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