FAFSA IDR plan renewal sabotaged by loan transfer - now $35k more in capitalized interest

This exact thing happened to me in 2023 when my loans transferred from Nelnet to MOHELA. Interest capitalization during servicer transfers is unfortunately a known issue that the Dept of Education CLAIMS they're addressing, but it's still happening regularly. Here's what I did that actually worked: 1. File a formal complaint through FSA Feedback system at studentaid.gov/feedback-center/ 2. Submit a CFPB complaint (Consumer Financial Protection Bureau) 3. Contact your congressional representative's office - they have staffers who specialize in federal agency issues DO NOT accept the runaround. The servicer that gave you the incorrect information is liable here. Print out your phone records showing the call to OldServicer on the date you mentioned. Request (in writing) that they pull the recorded call. Be persistent and document everything.

omg this happen to me to!!! both servicers will keep bouncing you back and forth hoping youll give up. theyr ALL SCAMMERS working together to make us pay more $$$

You need to contact the FSA Ombudsman Group. They're specifically designed to mediate disputes between borrowers and loan servicers when normal channels fail. I worked with them after a similar situation (though mine was only about $12k in capitalized interest), and they were able to reverse it within 6 weeks. Here's the direct link: https://studentaid.gov/feedback-ombudsman/disputes/prepare The key is providing detailed documentation of what you were told. Those customer service calls are recorded "for quality assurance" - demand they review the recording where you were given incorrect information. Be prepared that this might take 2-3 months to resolve, but don't give up!

have u tried just calling fafsa directly? i had to call like 50 times before i got thru but then they fixed my problem rite away

After trying for weeks to get through to someone at Federal Student Aid about a similar issue, I finally found this service called Claimyr that got me connected to an FSA agent in under 10 minutes. Basically saved my sanity after being disconnected 8 times trying to do it myself. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ and their website is claimyr.com if you want to check it out. FSA was actually able to file an official dispute with both servicers while I was on the phone with them.

I work as a financial aid advisor, and unfortunately, I see this scenario quite often. Here's what you should understand about the technical aspect: When loans transfer between servicers, there's a "blackout period" where no changes can be processed. If your IDR renewal deadline falls within that window, neither servicer can process it properly. This is a known system flaw. What the first servicer told you was incorrect. To fix this: 1. Submit a recertification request IMMEDIATELY 2. Request retroactive IDR application (this is possible due to CARES Act provisions still in effect) 3. File both FSA and CFPB complaints specifically citing "misrepresentation by federal loan servicer" I've seen about 80% success rate in getting the capitalized interest reversed in these cases, but it typically takes 45-60 days to resolve.

Coming back to update: my congressional representative's office was amazing for my similar issue. The key is to contact your HOUSE rep (not senators) since they handle more constituent services. Ask specifically for the staff member who handles student loan/education issues. They'll ask you to fill out a privacy release form, and then they'll contact FSA directly on your behalf. It took about 3 weeks, but they got my $18K in capitalized interest reversed completely. The difference is that when a congressional office inquires, agencies HAVE to respond promptly.

why dont u just refinance with a private lender to get away from the govt scammers?? my cousin did that and got way better interest rate

I'm a bit confused about the numbers here. Are you saying you had $35,000 in unpaid interest that got capitalized? That seems extremely high unless your loan balance is well into six figures. Most IDR plans actually cover part of the interest to prevent excessive negative amortization. Could there be other issues with your account beyond just the missed renewal?

After reading all these comments, I'm getting flashbacks to my own nightmare with Navient when they transferred my loans to Aidvantage. The thing nobody mentioned yet is that the Department of Education actually released specific guidance about interest capitalization during servicer transfers in 2022. If your transfer happened after July 2022, they were NOT supposed to capitalize interest just because of the transfer itself. Pull up the FSA announcement from July 2022 about the new capitalization policies and specifically cite that in your complaints. The servicers hate when you know the actual policy documents!