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Fedloan Servicing messed up recertification of income, looking for advice!

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Joined 2017-04-02

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Hey all -

Sorry in advance for the long post…

My fiancee has approx $150k in federal student loans (pharmacist) that she’s repaying through IBR in the hopes to qualify for PSLF (she works at a children’s hospital).  This past October we sent in all the proper paperwork to re-certify her income for this upcoming year.  Fedloan Servicing didn’t process it in time (despite the due date being in December), and in January her payment ballooned from $220 to $1,600 because her account reverted from IBR to the Standard Repayment Plan.  After calling them, they were able to resolve the payment issue and recalculate her payment down to $380, but it wouldn’t go into effect until February and said she still owed the $1,600 for January.  After some back and forth, they admitted to their mistake and said they needed to elevate the issue to the Department of Treasury to sort out.  They told us to continue making the $380 payments but to not pay the $1,600 and just wait to hear from the Dept of Treasury.  Additionally, because her account temporarily reverted from IBR to standard repayment, a large amount of interest was capitalized on her account.  It’s been 2 months and we still haven’t heard anything.  Her account is showing as 65 days past due because we were told to not pay the $1,600.  Every time we call, we’re told the ball is in the Dept of Treasury’s court and we “just have to wait” and that we can always go into forbearance.  We are getting worried because we don’t want to hit 90 days delinquent and have her reported to the credit bureaus and if she goes into forbearance, wouldn’t more interest continue to capitalize? 

Should she just pay the $1,600 to bring the account to current and then fight them on the capitalized interest?  Should she go into forbearance?  Has anyone been in this situation and had it resolved?  At this point, we are convinced we will never hear from the Department of Treasury.

Thanks,
Kevin

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Total Posts: 154

Joined 2015-01-08

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Welcome to the world of Fedloan Servicing!

I would not pay the $1,600….instead, contact the student loan ombudsman to look into your case.

They SHOULD have put you on an administrative forbearance while they sort it out. Don’t make them use a normal forbearance, because you have a limited number of those and interest capitalizes. An admin forbearance does not capitalize nor count against your forbearance limit. I think that the monthly $380 payments can and should still be made, but take excellent records and make sure you are given credit for it for pslf purposes once it is all straightened out. They need to reverse the capitalization that occurred as well.


But I wouldn’t waste time… put a request into the ombudsman to help get it taken care of faster.

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Total Posts: 154

Joined 2015-01-08

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Also, I wouldn’t make payments during a forbearance because they will not count it towards pslf.

Rank

Total Posts: 2

Joined 2017-04-02

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Thank you for the advice!  This has been my stance up until this point.  It just feels wrong to pay that much money to fix somebody else’s mistake, but the closer we get to the 90 day mark, the more antsy we are getting.  I have only researched filing a complaint with the CFPB, I have yet to research contacting the student loan ombudsman.  I’ll definitely do that.

Administrative forbearance, is there any information out there that you can direct me to about this?  Everything I have found regarding forbearance (administrative or otherwise) says that interest does capitalize.  If we were able to get into administrative forbearance where interest does NOT capitalize then this would definitely be the way to go.

Thanks again,
Kevin

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Total Posts: 154

Joined 2015-01-08

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Not sure, I think it’s discretionary. They did one for me when my billing was not correct for a month due to a screw up during consolidation (took them a year to get that one right, but that’s another story.) Interest did not capitalize.

Here’s a link to someone with a similar issue:

http://bostonstudentloanlawyer.com/its-my-turn-with-ibr-part-4-delayed-paperwork-and-the-dangers-of-forbearance/

If you pay the $1,600, you can be sure to kiss it good bye.
Hopefully you’ll get a good rep at the Ombudsman office. They have direct lines to managers/higher ups at the loan servicing companies so they can get things resolved a lot faster. Request that they waive the $1,600 due, reverse the capitalization that occured, and ensure you aren’t reported to the credit bureaus. If they offer a forbearance to fix things, ensure that interest will not be capitalized.

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Total Posts: 9

Joined 2016-10-13

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I would also recommended asking for a letter that states exactly what you are being told. I had a situation where I was given incorrect information about putting my loan into forbearance and when I called back to have the situation corrected I asked for a documented statement confirming what was told to me on the phone. Surprisingly they did send me the letter.