Anne breathed a sigh of relief in June when she received the notice she waited years for: her nearly $200,000 student-loan balance was forgiven.
After making payments since 2010 through the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments, Anne, 46 — who requested her last name be withheld for privacy — said she was “ecstatic” to see her balance wiped out.
“I actually didn’t believe it. I kept saying, ‘I can’t believe this happened. I really can’t believe this is true,” Anne told Business Insider. “I was crying, I was tearful, because it worked. It just felt like I did the right thing.”
Upon receiving confirmation of the loan forgiveness, Anne said she started putting money aside for retirement — something she couldn’t afford while paying for her kids’ parochial school.
“I’d been ignoring my own 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. She works in education at a nonprofit organization.
But all those plans got crushed when Anne received a letter from her student-loan servicer, MOHELA, in late February informing her that her loans were forgiven in error. She’s again on the hook for payments, and her $192,000 debt load was reinstated.
“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 to Anne, reviewed by BI, said. “Your account has been corrected and updated as explained below. We sincerely apologize for any confusion these errors may have caused.”
According to MOHELA’s letter, the company applied an incorrect end date to Anne’s public service employment history, resulting in an incorrect number of qualifying payments toward PSLF.
MOHELA did not respond to a request for comment from BI on this issue, and an Education Department spokesperson previously told BI that “the Department will not stand for egregious servicer errors that have harmed borrowers and perpetuated problems in the broken student loan system.”
Anne isn’t sure what to do next, but she knows she’ll have to “cut things out” of her budget to afford payments again.
“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,” she said. “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.”
‘I would’ve done things differently had I known’
Anne’s student debt comes from her teaching and law degrees, and she said that since she started consistently paying off her loans in 2010, she ensured her jobs were eligible for PSLF. She currently works for a qualifying nonprofit employer, but with her student loans reinstated, her timeline to move to a better-paying career is delayed.
“We’re lucky that we still have jobs. We’re lucky that we can pay our bills and we can do what we do. But I don’t wish this upon anybody, and I really feel bad for the people who are really much more cash-strapped than I am,” Anne said.
“I was hoping things would get better for my kids; not harder,” she said.
BI previously spoke to another borrower, Okwara, who MOHELA told that the loan forgiveness he received last year was a mistake. While the Education Department and MOHELA did not confirm the number of borrowers who received that notice, Okwara said a MOHELA representative told him about 500 borrowers were told they no longer have debt relief, meaning hundreds of people are likely reconfiguring their budgets as a result of this error.
“We just have to sit down and do our budget and figure out what we have to go back on because we have a mortgage now and everything that goes with owning a house,” Okwara said.
Going forward, Anne said she’s planning to resubmit her paperwork for PSLF while contacting her state representatives and the Education Department to get more information on MOHELA’s error — and while she plans to make her payments once again, she knows it’ll be a strain.
“It just doesn’t make any sense. There was no notice to borrowers. I had no notice that this was a possibility,” she said. “I’ve lived my life for eight months, but I would’ve done things differently than I had, had I known.”
