AES/PHEAA – CFPB Complaint ID 2752891

Date Received: 2017-12-12T00:00:00

Product: Federal student loan servicing

Issue: Dealing with your lender or servicer

Consumer Consent Provided to Share Complaint: Consent provided

Consumer Complaint: I setup an income based repayment plan in XXXX. 2017 reducing my monthly payments from {$540.00} to {$120.00}. This made paying my student loans more convenient based on my earnings.

Three months later, i find that the payments i have been making on this account has only been going to interest payments. I called XXXX and they informed me that the monthly payments always get applied to interest payments first. I graduated with a degree in XXXX XXXX XXXX and i work with amortization and interest capitalization schedules on a daily basis. I have an in depth understanding of how loans work and i am displeased with the deceptive practices by XXXX.

My issue with XXXX is that they did not provide adequate information to the consumer of the loan when offering to lower their monthly payments. Their pitch to the customer is that you can qualify for reduced income based repayment plans and it will reduce the financial burden of your student loans. I was only provided with the reduced payment amount and nothing else. I was not given any information on how the payments would affect my loan nor was i given an amortization schedule for the new loan payments.

Customers who qualify for reduced loan payments would gladly choose to have somewhat higher payment amounts if they find out that the reduced payment amount would not be affecting the balance on the loan. Essentially, the income based repayment is just a way for the loan company to make more money in the form of interest payments while the consumer gets no real debt relief. Once the loan gets recapitalized, the customer goes back to square one with respect to the balance of the loan.

I am a firm believer in personal responsibility and for consumers taking responsibility for their decisions. However, this practice is deceitful and is harmful to student loan borrowers who are already saddled with large amounts of debt. Customers should be provided with new loan terms whenever adjustments are made to existing loans in order for them to make better decisions.

See also  Ideal Collection Services, Inc. - CFPB Complaint ID 2579942

Company: AES/PHEAA

State/Zip: TX 750XX

Company Response to Complaint: Closed with explanation

Was Company Response Timely: Yes

Did Consumer Dispute Company Response: N/A

Complaint ID: 2752891

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