How can I dispute interest compounded because my ICR application was "late" when it was really just incomplete?

I took out around $80k in student loans in the early 1990s. I never finished school and my life spiraled out of control, like way out of control (drugs, prison). My loans went into default. I got my life back in order after 2000 and have since consolidated my loans, which at that time was $165k.

I am on the income-contingent plan and because I’m not able to work because of a health condition (but not enough to get disability, ugh), I have been on a financial deferment. But I still pay $5/mo.

Last year, I renewed my income-contingent application. At that time, there was a change in my income and I hadn’t yet filed my taxes, so I gave them my last three pay stubs. But since the two older ones were more than three months old (because I am a part-time teacher with no paycheck over the summer and this was right after the summer), they didn’t count them and said that my application was “incomplete.”

By the time I gave them the information they needed, my application was then considered “late” and my interest compounded (around $120k) so now my principal is over $285k.

I tried to talk to my lender, but they said they can’t do anything. Is this true? Can I fight this? Is there anyone who can help me? I am being SO screwed and I was really doing all I could do things right!!


It sounds like they may have capitalized your interest when you feel off of an IDR plan?

I’ve never run into exactly this situation before, and I’m not sure if we can do anything about it. But I’d be happy to hop on the phone with you and call your servicer to learn more and see if we ask them forcefully enough, they might make an adjustment. You could always start a case file with the FSA ombudsman’s office, but I have never, not once, have them actually resolve a situation we have brought to them. You could also file a claim with the CFPB, which would at least get a written response from the servicer. Having what they think happened in writing could be helpful, although I doubt it will be a silver bullet.