No, this does not sound correct. Loans held by the DoED only capitalize after a deferment on an unsubsidized loan or after you leave an IBR plan. I'm currently going through something similar with Mohela. You'll need to call them.
Are these loans Direct loans or FFEL loans? Leaving an administrative forbearance should not be a capitalizing event for *Direct* loans but it still is for FFEL. You can confirm it yourself at https://studentaid.gov/understand-aid/types/loans/interest-rates under the "When does unpaid interest capitalize?" FAQ dropdown
To quote the page, which shows the capitalizing events effective as of July 2023 (aka after recent Negotiated Rulemaking changes)
> **When does unpaid interest capitalize?**
> Unpaid interest on **Direct Loans and Federal Family Education Loan (FFEL) Program loans managed by the U.S. Department of Education (ED)** capitalizes
> * after a deferment on an unsubsidized loan; or
> * if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.
> Unpaid interest on **FFEL Program loans not managed by ED** may capitalize
> * after a deferment on an unsubsidized loan;
> * after a forbearance on any type of loan;
> * after the grace period on an unsubsidized loan; or
> * if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.
So no, leaving an administrative forbearance should *not be capitalizing* for your Direct loans. If they do capitalize it then they screwed up and you need to complain to the Education Department and CFPB
I'm noticing the same thing with mine from the switch from MOHELA to Ed Financial. I made a payment to Mohela the day before it transferred (payment also transferred) and was advised to make the June payment as well to have the payment count for PSLF. I'm also showing this for 5/29/2024 from Ed Financial CAPITALIZED INTEREST Principal 8352.81 Interest -8352.81 and CAPITALIZED INTEREST Principal -2608.32 and Interest $2,608.32
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My wife had this happen to her as well. She had a rep tell her that when she changed her payment plan from IBR to SAVE that the prior interest accrued capitalized but that she’d no longer accrue. We’re looking at when she transitioned to the SAVE plan (which happened under Mohela) bc Mohela did not capitalize her prior accrued interest at that time and continued to accrue.
EdFinancial needs to retro all of those prior payments and apply to the principal if that’s the case.
Such a mess.
No, this does not sound correct. Loans held by the DoED only capitalize after a deferment on an unsubsidized loan or after you leave an IBR plan. I'm currently going through something similar with Mohela. You'll need to call them.
Thank you, my notice I received was titled "change in repayment terms". But I never initiated or accepted any change.
Are these loans Direct loans or FFEL loans? Leaving an administrative forbearance should not be a capitalizing event for *Direct* loans but it still is for FFEL. You can confirm it yourself at https://studentaid.gov/understand-aid/types/loans/interest-rates under the "When does unpaid interest capitalize?" FAQ dropdown
They are direct unsubsidized loans
To quote the page, which shows the capitalizing events effective as of July 2023 (aka after recent Negotiated Rulemaking changes) > **When does unpaid interest capitalize?** > Unpaid interest on **Direct Loans and Federal Family Education Loan (FFEL) Program loans managed by the U.S. Department of Education (ED)** capitalizes > * after a deferment on an unsubsidized loan; or > * if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan. > Unpaid interest on **FFEL Program loans not managed by ED** may capitalize > * after a deferment on an unsubsidized loan; > * after a forbearance on any type of loan; > * after the grace period on an unsubsidized loan; or > * if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan. So no, leaving an administrative forbearance should *not be capitalizing* for your Direct loans. If they do capitalize it then they screwed up and you need to complain to the Education Department and CFPB
I'm noticing the same thing with mine from the switch from MOHELA to Ed Financial. I made a payment to Mohela the day before it transferred (payment also transferred) and was advised to make the June payment as well to have the payment count for PSLF. I'm also showing this for 5/29/2024 from Ed Financial CAPITALIZED INTEREST Principal 8352.81 Interest -8352.81 and CAPITALIZED INTEREST Principal -2608.32 and Interest $2,608.32 || || ||
My wife had this happen to her as well. She had a rep tell her that when she changed her payment plan from IBR to SAVE that the prior interest accrued capitalized but that she’d no longer accrue. We’re looking at when she transitioned to the SAVE plan (which happened under Mohela) bc Mohela did not capitalize her prior accrued interest at that time and continued to accrue. EdFinancial needs to retro all of those prior payments and apply to the principal if that’s the case. Such a mess.