When President Joe Biden announced that his administration would forgive the loans of thousands of people, it was great news to many. He also announced that 74,000 new borrowers would see their student debt disappear as the Education Department offered an additional $5 billion in forgiveness.
This offer was open to 44,000 public employees and tens of thousands of borrowers who made at least 20 years of payments on income-driven repayment plans. This news seemed too good to be true, and people were beyond happy.
However, the other shoe dropped when loan companies started contacting people, telling them their debts were still outstanding. A 46-year-old public servant, Anne shared her story with Business Insider. According to her, the loan company said her student debt balance of almost $200,000 was forgiven under the public service workers plan.
She had thought she was eligible as she had made her monthly payments on time, and since the program applies to those who have made payments for ten years, she was happy to have her entire debt cleared.
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“I actually didn’t believe it,” Anne told Business Insider. “I kept saying, ‘I can’t believe this happened.” She continued, “I really can’t believe this is true.’ I was crying, I was tearful, because it worked. It just felt like I did the right thing.”
In addition, she started to save for retirement and make plans for her children. “I’d been ignoring my future, so with the relief, I was able to put more into retirement, and I started making plans for my kids, for their future schooling,” Anne said.
However, her world turned upside down when she received a letter from her student loan servicer, MOHELA, some months later. According to the letter, clearing her loan was a mistake, and she would still need to pay about $192,000 back to them.
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“We recognize you currently participate in the PSLF Program. However, you have not yet achieved the 120 qualifying payments required for this loan forgiveness,” MOHELA’s letter read.
“Your account has been corrected and updated as explained below. We sincerely apologize for any confusion these errors may have caused.” It also stated that Anne’s employment history had an incorrect end date, which altered the number of qualifying payments she had listed.
Understandably, Anne was devastated by this news and was unsure what to do. Her life plans have changed again, as she must now pay the $192,000 back. “My kids were going to do summer camp. I was going to study for the bar exam. So I might have to put that off because I don’t think I’ll have money to pay for the course,” Anne said.
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“I’m very upset. I’m not going to be able to buy a new car. My whole world has been flipped over in a matter of a week.” Moreover, Anne is not the only person to whom this has happened recently. Loan companies are contacting many people who thought they were debt-free.
Therefore, those who think the government has forgiven their loans must be sure there was no error like Anne’s.
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