For nearly a decade, the government took hundreds of dollars every month from the paychecks of a Florida woman named Michelle to pay off old student loans that were unpaid and overdue. The process, called garnishment, is legal, and the US Department of Education can order it for repayment on defaulted loans for one’s wages, tax returns and Social Security.
Michelle’s makeup debut took place in 2008. As a public school teacher in Orlando, who asked to be identified only by her first name because this story involves her personal finances, she struggled for the next eight or nine years while supporting her two children. ,
“I almost lost my house and everything because I couldn’t afford it,” she said. And with nearly $800 a month suddenly gone, Mitchell recalls facing sometimes impossible day-to-day decisions: “I have to consider, ‘Do we get this food or do we keep the lights on? Which is more important now?’ ,
After the garnishment period expired, Mitchell believed her student loans were paid in full. But, last spring, she began receiving notices about a separate loan she had borrowed through the now-shuttered Perkins Loan Program while pursuing her undergraduate degree at the University of Florida.
The program offered low-interest federal loans to undergraduate and graduate students with “exceptional financial need,” according to the Department of Education, and is now being phased out since it officially closed in September 2017. Mitchell applied for loan forgiveness through the Perkins program upon graduating from the University of Florida in 1997, and later met the teaching service requirements to receive it.
So, when Mitchell uncovered a letter from her alma mater in July saying her Perkins loan repayments were “critically past due,” she was stunned. Even more confusing than the bill was the amount she said she still owed the school: $955,000.02.
“I really went into depression. I hid. I didn’t know how to explain it because it was so long ago,” Michelle said. “So now, I guess, I’m about to retire and I’m about to lose everything.”
Michelle turned out to be wrong. Thanks in large part to an Internet stranger with decades of expertise who eagerly offered to help her through the student loan debacle, her situation changed almost overnight.
Michelle’s daughter posted the letter to Reddit — a site that Michelle said she’s visited “probably twice” before in her life — in a section devoted to discussion about student loans. Users of the site quickly tagged one member — Betsy Mayott, president and founder of an organization called The Institute of Student Loan Advisors, which provides free services to borrowers like Mitchell.
Mayotte is a regular on the site’s r/StudentLoans subreddit, where people share personal experiences and tips while navigating challenging repayment schedules amid changing loan relief policies under the Biden administration, and often uses it to connect with those who need advice about their debt. In a comment on Michelle’s daughter’s original post, another user calls Mayotte a “goat,” meaning the greatest of all time.
Mayotte, having worked before with Perkins loan borrowers who had been blindsided by unexpected bills, stepped in as a liaison between Mitchell and the University of Florida. The original amount was quickly determined to be a mistake. A spokeswoman for the University of Florida attributed the error to a technical problem at ECSI, a company hired by the university to act as a loan servicer for alumni paying off balances through the Perkins program.
While the university said in a statement that it could not comment specifically on Mitchell’s case, citing records protection laws for students, the school said it “has never owed any student any University of Florida money”. Nearly $1 million in student loans.
“However, in July, the University of Florida learned that a computer system used by the company that handles billing for the university issued statements with incorrect amounts to borrowers from several schools, including UF,” the statement continued. . A university spokesman later said that ECSI planned to issue a new statement “reflecting the correct balance” within a week after the error came to light.
A spokeswoman for ECSI confirmed the calculation issue and acknowledged in a statement that the company “sent letters to a small number of borrowers indicating incorrect amounts on their loans” over the summer.
“These letters were promptly rectified and we apologize for any inconvenience this may have caused,” the spokesperson said.
By late August, Mitchell had received at least one of several revised statements that would eventually arrive by mail from the University of Florida. The new balance was still quite high, around $8,000, and while Michelle said she “definitely felt better because she wasn’t a million,” she was also skeptical of the revised number, which appeared on her online account. did not tally with the balance paid. , was wrong.
After graduating with her bachelor’s degree, Mitchell applied for loan cancellation through a tutoring program offered to Perkins loan recipients. It promised to cancel a portion of the borrower’s loan for each academic year spent teaching at certain schools, or in certain subject areas. For example, someone who teaches at a school serving students from low-income families, or teaches special education, math, science or foreign language classes, would be eligible for full loan forgiveness.
Mitchell fulfilled the requirements of the various teaching positions he held during the five years. She submitted the necessary records to confirm her eligibility for relief under the guidelines of the Perkins program, and assumed that the loan was forgiven. But, when Mayott again reached out to the university with questions about Mitchell’s updated balance, she was told that Mitchell’s records never arrived.
“He said he never got it,” Mayotte said. He added that, in his experience, miscommunication between Perkins loan borrowers and their loan servicers is common, despite company policies that are technically required to send loan servicers monthly notifications about their bills, especially when they are past due. Unlike other federal student loans, which are managed by vendors or servicers affiliated with the Department of Education, Perkins loan servicers have historically been the universities themselves, which then outsource the loan servicing functions to a third party.
“I see all the time people who say, ‘I haven’t had a bill for my Perkins loan in 10 years, 20 years,'” Mayott said. “It makes it really difficult for the borrower. You know, sometimes it’s a legitimate bill. But if it’s not, who keeps the consumer records for 20 years to foreclose on that?”
ECSI did not become a loan servicer to the University of Florida until the early 2000s, when Mitchell filed forgiveness paperwork with the school, and a company spokesperson said it had “no involvement” in the record-keeping process. Which determines whether or not. He was relieved.
“Nevertheless, we were pleased to help rectify the institution’s issues and loan forgiveness with this borrower,” the spokesperson said.
Mitchell, “thankfully,” was able to prove her eligibility for retroactive relief through the Perkins loan tuition program, according to Mayott. Her final balance: $408, which she said was paid in full two weeks ago.
Mitchell said, “When I got that letter I just had the word Amen.” “I couldn’t fully process it. I was just grateful.”
Although Mitchell’s excessive student loan balance was a mistake, Myatt said some clients she’s worked with before actually owe closer to $1 million in borrowed money to go to school.
A recent report published by the Education Data Initiative points to an ongoing student debt crisis in the US that has proven difficult to remedyDebt Waiver Scheme- pursuant to a court order, and potentially , Student debt currently stands at $1.745 trillion nationwide, according to the report, which puts the average federal loan debt balance at just under $38,000. But, with Biden’s pardon plan stalled, the administration recently announced its On student loan repayment by June of the following year.
“Education, when financed by student loans, does not live up to its mantra as the ‘great equalizer,'” Mitchell said in an email, adding borrowers, especially those who go on to work in the public sector often “grow old” with student loan debt and sometimes never fully able to plan for the future, upgrade lifestyle, save, invest, or retire on time . Salaries are generally very low – paycheck to paycheck – and life cycle loans last a whole lot longer.”