For nearly a decade, the government took hundreds of dollars each month from the paychecks of a Florida woman named Michelle to recover old student loans that were unpaid and overdue. The process, called a garnishment, is legal, and the U.S. Department of Education can garnish someone’s wages, tax returns and Social Security to force repayment of delinquent loans.
Michelle’s seizure began in 2008. As an Orlando public school teacher who asked not to be identified by her first name only because this story involves her personal finances, she spent the next eight or nine years struggling to make ends meet and support her two children. .
“I almost lost my house and everything because of it because I just couldn’t afford it,” she said. And when roughly $800 a month suddenly disappeared, Michelle recalled that she sometimes faced impossible decisions on a daily basis: “I have to consider, ‘Are we going to get this food or are we going to keep the lights on?’ What’s more important now?'”
After the foreclosure period ended, Michelle believed her student debts were paid in full. But this spring, she began receiving notices about another loan she took out through the now-defunct Perkins Loan Program while she was 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 has now been phased out since officially closing in September 2017. Michelle applied for loan forgiveness through the Perkins program after he graduated from the University of Florida in 1997 and later met the tuition requirements to receive it.
So when Michelle opened a letter from her alma mater in July indicating her Perkins loan payments were “severely overdue,” she was stunned. Even more confusing than the bill itself was the amount he still owes the school: $955,000.02.
“I actually got depressed. I went to hide. I didn’t know how to make sense of it because it was so long ago,” Michelle said. “So now I think I’m going to retire and lose everything.
Michelle was proven wrong. Thanks in large part to an internet stranger with decades of experience who eagerly offered to help solve the student loan debt debacle, her situation changed almost overnight.
Michelle’s daughter posted the letter on Reddit — a site Michelle said she had visited “maybe twice” in her life before — in a section dedicated to student loan discussions. Web users were quick to tag one member — Betsy Mayotte, president and founder of an organization called The Institute of Student Loan Advisors, which provides a range of free services to borrowers like Michelle.
Mayotte is a regular on the r/StudentLoans subreddit, where people share personal experiences and tips navigating daunting payment schedules amid changing debt relief policies under the Biden administration, and he often uses it to connect with people who need advice on their loans. Commenting on the original post by Michelle’s daughter, another user calls Mayotte the “GOAT”, meaning greatest ever.
Mayotte, who had previously worked with Perkins loan borrowers who had been blindsided by unexpected bills, stepped in as an intermediary between Michelle and the University of Florida. The original amount was quickly determined to be a mistake. A University of Florida spokesman attributed the error to a technical problem at ECSI, the company the university hires to act as a loan servicer for former students paying off balances through the Perkins program.
While the university said in a statement that it could not comment specifically on Michelle’s case, citing student records protection laws, the school noted that “no student at the University of Florida has ever owed” nearly $1 million in student loans.
“However, in July, the University of Florida learned that a computer system used by a company that processes billing for the university issued statements with incorrect amounts to borrowers for many schools, including UF,” the statement continued. A university spokesman later said ECSI planned to issue new statements “reflecting the correct balances” within a week of the error coming to light.
An ECSI spokesman confirmed the calculation problem and acknowledged in a statement that the company “sent letters to a small number of borrowers reflecting incorrect amounts owed on their loans” over the summer.
“These letters were immediately rectified and we apologize for any inconvenience this may have caused,” a spokesman said.
By the end of August, Michelle received at least one of several amended statements that eventually arrived in the mail from the University of Florida. The new balance was still quite high at about $8,000. While Michelle said she “obviously felt better because it wasn’t a million,” she also suspected the corrected number, which didn’t match her online account balance, was incorrect.
After completing her bachelor’s degree, Michelle applied for loan cancellation through the tuition program offered to Perkins loan recipients. It promised to cancel part of the loan to the borrower for each academic year spent teaching at certain schools or in certain subjects. For example, someone who taught at a school serving low-income students or taught special education, math, science, or foreign language classes would qualify for full loan forgiveness.
Michelle has fulfilled the requirements of various teaching positions held over the course of five years. She submitted the records necessary to confirm her eligibility for relief under the Perkins program guidelines and assumed the loan was forgiven. However, when Mayotte contacted the university again with questions about Michelle’s updated balance, she was told that Michelle’s records never arrived.
“They said they never got it,” Mayotte said. She noted that in her experience, a lack of communication between Perkins borrowers and their lenders is common, despite company policies that technically require lenders to send borrowers monthly notices about their accounts, especially when they are past due. Unlike other federal student loans, which are administered by vendors or servicers affiliated with the Department of Education, the originators of Perkins loans have historically been the universities themselves, which then outsource the loan origination tasks to a third party.
“I keep seeing people saying, ‘I haven’t had a bill for my Perkins loan in 10 years, 20 years,'” Mayotte said. “It’s really difficult for the borrower. You know, a lot of times it’s a legitimate account. But if it isn’t, what consumer keeps records for 20 years to bring it back?
ECSI didn’t become a lender at the University of Florida until the early 2000s, years after Michelle submitted her forgiveness paperwork to the school. A spokesman for the company said it was “not involved” in the record-keeping process that determined whether or not it was granted relief.
“However, we were happy to assist the institution with the issues it had with this borrower and correct the loan forgiveness,” the spokeswoman said.
Michelle, “fortunately,” according to Mayotte, proved her eligibility for retroactive relief through the Perkins Loan Tutorial Program. Her final balance: $408, which she said was paid in full two weeks ago.
“The only word I had was amen when I got that letter,” Michelle said. “I couldn’t quite process it. I was just grateful.”
Although Michelle’s exorbitant student loan balance was a mistake, Mayotte said she has previously worked with several clients who actually owe nearly $1 million on school loan money.
A recent report released by the Education Data Initiative points to the ongoing student debt crisis in the US, which has proven difficult to fix despite President Biden’s promised loan forgiveness plan — now suspended by court order and potentially headed for the Supreme Court. Student debt currently stands at $1.745 trillion nationwide, according to the report, which puts the average debt balance on federal loans at just under $38,000. But with Biden’s forgiveness plan stalled, the administration recently announced it was extending the student debt repayment pause until next June.
“Education, when financed with student loans, does not live up to its mantra as the ‘great equalizer,'” Michelle said in an email, adding that borrowers, especially those who continue to work in the public sector, often “age out.” with student loan burdens and sometimes they are never, ever fully able to plan for the future, improve their lifestyle, save, invest or retire early. The pay is generally too low – paycheck to paycheck – and the loan life cycle takes too long.”