Formerly Happy With DRB...Now a warning

[acb550]

We signed up for DRB because of their great rates at the time.  We were happy with them.  Sure, the application process was more than a little tedious and the CampusDoor isn't the best.  But the customer service had always been good, and you couldn't argue with the rates.  The website needed work, and, like most servicers, they unfortunately didn't take any credit card payments (some do for over the phone extra payments).  But a very nice perk was that you could make your extra payments principal only.  Yes, that's right, just principal, none of it went to paying interest first.  The interest was taken care of in the regular payment and you could really knock it down.
Well... DRB is sold the servicing aspect to MOHELA.  MOHELA is fine as servicers go.  We had them before.  I'll have to check with them to see if they take credit card now for extra payments.  I'm really sorry to see the interest only payment feature go.  Now when we pay extra, we won't be getting quite the deal.  But here is where I got very mad:

In the letters we received from DRB, MOHELA was taking over August 1.  We wouldn't have access come Jul 26 (the due date of the loan).  I wasn't sure if it meant they were switching right before or after the loan.  Our autopay was set the 26th of every month (and yes 26th was the due date, and we had whatever the grace period was... I never paid attention to that).  I called in upon receipt of the notification.  I explicitly asked about the payment.  Would the loan be paid on the 26th?  Was everything set for July and then we set it all up for MOHELA come August?  I was assured that yes, we were fine, the auto debit from our bank account would occur on the 24th (well 25th as this month it was a Sunday), and the loan would be paid the 26th, MOHELA gets everything the 1st.

I signed in and didn't have access to the loan.  And the payment money... was still sitting in the account.  I called DRB.  They said since the money was sitting there and the loan was done on the 26th, the loan wouldn't be paid UNTIL MOHELA took over.  In theory it will be paid out August 1st.  I asked what this did to the interest.  Would we have 5 or 6 more days of interest built up, or would the payment be treated as if paid on the 26th.  The woman had no idea.

First I disliked how the loan got changed out from beneath us, and while terms are the same, the treatment of the loan (i.e. principal only payments) are different.  Then I called in with 1 question and 1 question only.  Was told one thing.  Then something else happened.  If I was just told that no, the loan wouldn't be paid, I would have gone in and paid ahead.  It would have been simple.  But I was given misinformation and I'm very unhappy about that.

[Zaphod]

I dont understand completely your complaints nor what you want, seems you just want to vent? I cannot count the number of times my loans have changed servicers, this will not be the last time. If instead of being concerned about the switch you didnt pay attention nothing materially would happen and you might have saved yourself some anxiety.

-Any extra payment is always applied to principal, this is how all but the sharkiest of loans work, has zero to do with DRB. How is this different at Mohela (I have a couple of loans with Mohela and this is how mine work, and literally every loan I've ever had which is quite a few)? I would take a very large bet this is also the case now. The reason its that way at DRB is its in the terms, and the terms are the same are they not?

-5 days of interest accumulation isnt going to change your life plan, dont over think it. Yes, this is what will occur in this situation.

-The person you spoke to is essentially a receptionist/secretarty, cut them some slack. If they cant answer your questions then move up the chain.

-Since you are unhappy with this event, consider yourself lucky to not be dealing with them anymore.

You talk about a couple different pay structures and options with some not being available anymore. What plan were you on and what are your options now? Sounds like you may have been on an interest only plan for low payments but overpaying to knock down principal, but hard to be sure. Doubt it will be materially different arranged another way if you can afford extra payments anyway, but you'd have to do the math.

[acb550]

No. If you look at the print, almost every servicer applies extra payment to accrued interest then principal.  It also says it in MOHELA.  Look at the FAQ about how extra payments are applied.

 

from the website:

Payments are applied first towards any outstanding fees, then outstanding accrued interest, and the remainder to the principal balance. Payments received under the Income-Based Repayment Plan will be applied first to interest, then any outstanding fees, and the remainder to the principal balance.

After satisfying the monthly amount due, additional payments received will be distributed across all loans unless you request to make additional payments to specific loans. If your account is past due, payments will be applied to the past due balance.

If you have satisfied your future payment, your billing statement will indicate a payment is not required for that bill. You may still continue to make payments to decrease your total interest cost and pay your loan off sooner.

I do realize loans change hands, it is frustrating that they sold, yes.  But my anger is that I was told one thing when that was my one question and then I was told something else when I called in.  The woman I spoke to today didn't offer to move on, she basically said my questions would be answered once MOHELA took over.  (Again I had loans in the past with MOHELA and I like them a LOT better than Sallie Mae).  When there are still almost $200K in debt, every day of interest counts.

And no, we were not on interest only repayments or anything like that.  In residency, we were on IBR.  The loan servicers changed 3 times in that period and the one we were with longest didn't do over phone or internet extra payments, and it got to too much trouble sending in extra money because of the delays and we never knew when we'd be changed again, and our amount owed went up because interest accrued and capitalized.  We were really happy with DRB, and we promoted them even though others had issues (the application is a barrier to some).  They are a small bank and we always spoke with the same people on the phone.  Suddenly it seems they've gotten bigger, talking to people we haven't spoken to before and now our loan is being sold to another servicer.  DRB no longer has that small take care of you quality that made the hard of doing business worthwhile.  It feels too systemic and, my argument is that if you are told something, adhere to it.  Or tell us that we should plan ahead.  They didn't do that and that was poor costumer service

[Zaphod]

acb550 wrote:

No. If you look at the print, almost every servicer applies extra payment to accrued interest then principal.  It also says it in MOHELA.  Look at the FAQ about how extra payments are applied.

 

from the website:

Payments are applied first towards any outstanding fees, then outstanding accrued interest, and the remainder to the principal balance. Payments received under the Income-Based Repayment Plan will be applied first to interest, then any outstanding fees, and the remainder to the principal balance.

After satisfying the monthly amount due, additional payments received will be distributed across all loans unless you request to make additional payments to specific loans. If your account is past due, payments will be applied to the past due balance.

If you have satisfied your future payment, your billing statement will indicate a payment is not required for that bill. You may still continue to make payments to decrease your total interest cost and pay your loan off sooner.

I do realize loans change hands, it is frustrating that they sold, yes.  But my anger is that I was told one thing when that was my one question and then I was told something else when I called in.  The woman I spoke to today didn’t offer to move on, she basically said my questions would be answered once MOHELA took over.  (Again I had loans in the past with MOHELA and I like them a LOT better than Sallie Mae).  When there are still almost $200K in debt, every day of interest counts.

And no, we were not on interest only repayments or anything like that.  In residency, we were on IBR.  The loan servicers changed 3 times in that period and the one we were with longest didn’t do over phone or internet extra payments, and it got to too much trouble sending in extra money because of the delays and we never knew when we’d be changed again, and our amount owed went up because interest accrued and capitalized.  We were really happy with DRB, and we promoted them even though others had issues (the application is a barrier to some).  They are a small bank and we always spoke with the same people on the phone.  Suddenly it seems they’ve gotten bigger, talking to people we haven’t spoken to before and now our loan is being sold to another servicer.  DRB no longer has that small take care of you quality that made the hard of doing business worthwhile.  It feels too systemic and, my argument is that if you are told something, adhere to it.  Or tell us that we should plan ahead.  They didn’t do that and that was poor costumer service

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If you're applying an extra payment along with your regular payment, it is essentially going towards principal anyway, net effect the same. You have this option with Mohela, I do the same with them and other servicers and while that is the language it just goes to the principal. That language is to cover them mainly for people paying extra after some latency or missed payments. Luckily they have a very simple and automatic extra payment system on Mohela so it will be much easier now and automated and will go to your principal so effectively the same (yes, depending on when the statement/payment differential occurs you may incur a tiny amount of interest).

I dont really know anything about how IBR or PSLF stuff works since Im not doing those, I guess if you had some large interest component built up that might suck, but if you refinanced isnt restructured? Im just saying there are a lot of things to get frustrated about in the world and this is small/insignificant and not worth your mental anguish.

[The White Coat Investor]

This "pay principal" issue with DRB was addressed in the comments section of a post months ago. Despite your contract saying that payments go first to interest, an error on their part was in your favor allowing you to do that for a few months. Obviously, no lender in their right mind does that on purpose and DRB certainly wasn't planning to. So I say count your blessings and move on.

At any rate, if you don't like DRB you can always refinance with a different company. You can do it as many times as you like.

[MrsIMDoc]

My poor experience with DRB:

DRB had required you to make a checking account with them to receive the discount when paying your loans, which should be no problem other than the inconvenience of having another checking account. When they transferred to MOHELA there is no benefit to having the DRB checking account.  Therefore, I called asking to transfer the funds out of the account prior to closing. However I was told that is not an option and to close the account and the funds would be mailed to me. Irritation #1 - having to wait for snail mail.

Irritation #2 - What seemed unprofessional and concerning was that they discouraged me from using the secure message system.  They said I should send an email because their secure messaging system is not that great. I said I was uncomfortable with this but they said it was the only way.  Therefore, I sent them an email (unsecured with my account number) and it bounced.  I called back and they explained they gave me the wrong email address.  Overall this company does not seem that professional, especially as a banking company recommending against using their own secure message system.

 

[azureoid]

I, too, am disappointed with how this transfer has gone about. The biggest frustration is that the autopay method used to get the rate discount is broken because of the transfer, and Mohela requires 3 business days to update the autopay, which isn't enough time between transfer date and due date.

[PNWskindoc]

Already posted this on the comments section of one of the DRB posts but they didn't honor my grace period after I graduated residency. After going back and forth several times, I eventually gave up. As you can imagine, having to make a payment on a 10 year variable loan on 350k+ loans for someone who hasn't even started their first attending job can be financially disastrous if not for a healthy emergency fund. In addition, their staff was not very professional or helpful at all. I ended up refinancing with CommonBond at a much better rate and the overall application was just so much easier and streamlined.