What would cause a loan servicer to automatically switch someone from IBR to ICR duing the required annual renewal of IBR on the online e-application?

I authorized proof of payment on studentloans.gov to renew my IBR, and just received a letter stating my repayment terms under the ICR repayment plan. I never requested this my interest is now being capitalized. I also assume my wife’s student loans are not being factored in to this new repayment as ICR is not friendly to married couples with loans. I have been unable to get an email response back from my loan servicer. Is this normal and if a mistake has been made, it it correctable or will I be stuck with the capitalization, etc?

Thanks!

Unfortunately, mistakes by loan servicers are all too much the norm.  It ought to be correctable, but will likely require a frustrating amount of time and effort on your part.  My suggestion is that you begin by contacting the servicer by snail mail, and be specific about what it will take to get you back to the position you were in before they messed up.

If you can’t resolve it on your own, I recommend that you contact the Student Loan Ombudsman and complain to the Consumer Financial Protection Bureau as well as your congressional representatives.  (CFPB doesn’t have authority over federal loans but I say tell them anyway, it’s all the same servicers). 

For more about the huge problems in student loan servicing see:
http://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=311843
http://www.propublica.org/article/student-loan-borrowers-dazed-and-confused-by-servicer-shuffle
http://ifap.ed.gov/eannouncements/110912LSIFedOwnedLoanInitiativesPlanforNovandDec2012.html

Thank you, Heather. I was not able to get it fixed by phone, but I was finally able to go to the office in person of my direct loans servicer and they stated that I checked a box for the best payment plan. I checked my online application, and I did not. They have fixed my payment (IBR is lower either way), and they don’t know how any of this happened, but they did not reset the interest as they said it was only $10 and I decided it was not worth any extra time. Does that sound low? Is there any way for me to obtain proof of how much was capitalized? I have no documents stating capitalization.