So my husband and I finally had the revelation to file taxes separately in order to drop my monthly payment for my student loans. I am under the PAYE program and public service loan forgiveness, so my goal is to get as tiny of a monthly payment as possible.
My current payment is $1300 per month. According to the payment calculator, my new payment since filing separately will be around $300. I applied to recertify/update my income with myfedloan servicing on April 16. They told me it would take 7-10 days to process, that I would still need to make the May payment of $1300 but by June it would be the new, much lower payment.
Well, it's been crickets. Finally, I called yesterday and was told that my application was still being processed. That they are experiencing delays with processing, and now it could take between 15-30 days! So I'm going to have to make ANOTHER payment that is $1000 higher than it should be. I asked if I would be reimbursed for the difference and surprise surprise, no, I won't be. Isn't there some sort of limit by law on the time they can take to process a repayment application?
I remember last year when I was late with my annual recertification, they IMMEDIATELY bumped me to the highest payment possible. I ended up having to go into forbearance and then had my interest capitalized as a penalty. They do not show the same "courtesy" we are expected to afford them!
Anyone have advice or know what the rule is on processing times? And what can I do if they keep delaying indefinitely?
1. You can go into deferment until it's processed.
2. You can file a complaint with the CFPB: https://www.consumerfinance.gov/complaint/
Thank you for the advice. But won't they just recapitalize my interest if I do that?
Yes, if you don't pay the interest as it accrues. If you pay the interest, they don't recapitalize it. Some loan types also don't make you pay the interest in deferment. https://studentaid.ed.gov/sa/repay-loans/deferment-forbearance
Unfortunately my interest rate is too high for this to be feasible. So there really is no limit on how long fed loan servicing can drag their feet on my application?
It typically takes 30-90 days.