Like many of y’all, I’ve been in SAVE forbearance limbo. Last year I noticed MOHELA was accruing interest on my account during a period when it should have been 0%. I filed complaints with MOHELA directly, the BBB, and the Department of Education. Every time, MOHELA told me the interest was correct.
I finally had my Congressman’s constituent services office escalate it to ED and MOHELA. Here’s the response I got back (paraphrased with my name removed):
“We have prioritized a review of [my] account and have made adjustments based on the SAVE forbearance and the 0% interest accrual. The account balance was increased by $1,123.12. To provide 0% interest during an authorized period, our system calculates the amount of interest that would have accrued and reduces the accrued interest by that amount. Due to multiple extensions of the 0% rate by FSA and the timing of those extensions, there were instances where the period for which the 0% was applied overlapped. This resulted in too much interest being reduced and caused the accrued interest to be negative. When corrections were made to remove the overlapping periods, the balance was adjusted to the correct amount.”
Their fix to my complaint about incorrect interest accrual was to increase my loan balance by over $1,100.
The explanation doesn’t add up. “Negative interest” caused by overlapping 0% periods — that’s a MOHELA system error, not something borrowers should be paying for.
No itemized calculations were provided. I have no way to verify this number is correct. I was just told to accept it.
I consulted an attorney. Unfortunately, I was advised that litigation is unlikely to be worth pursuing given my state’s limited consumer protections, MOHELA’s potential sovereign immunity arguments, and the relatively small dollar amount at stake.
I’m posting because I strongly suspect I’m not alone in this. There have been other cases introduced (CA) of similar issues, but with much larger interest accrued. If MOHELA’s system made this error on my account, it likely made it on thousands of others.
Has anyone experienced something similar — interest accruing during SAVE forbearance, or a mysterious balance increase after filing complaints?
Extra interest in hearing from folks in GA, FL, or AL, where state-level consumer protection options are similarly limited. (And we’d be in the same federal circuit.)
If enough of us have the same issue, there may be options that aren’t available to us individually.
MOHELA incorrectly accrued interest on my SAVE forbearance — then “corrected” it by adding $1,123 to my balance
byu/polymath0212 inStudentLoans
Posted by polymath0212
1 Comment
Unfortunately, the explanation does add up. Say you accrued $100 in interest in 1 month. Their system was set up to deduct 100 dollars to keep the interest at zero. However if a period of 0% interest overlapped, their system is dumb, so it said “okay deduct $100 due to forbearance A.” But because it also saw a “forbearance B” overlapping in that same period it said “oh okay deduct that too”
If someone owed you $100, you’d want that money, and are rightfully owed that money.
It’s really dumb when people say “oh but it was your systems error! Not my fault, haha, I should be off the hook!” But that’s childish reasoning to be quite frank. If you cashed a check and only got half the money and the bank said “lol system error, get rekt,” you’d have a much different tune about system errors.
I do however think they should have to provide the actual accounting to you.