Woman Whose $192,000 Student Loan Wiped Clean Ordered to Pay

Several student loan borrowers received word that their debts would be wiped clean in the tens or even hundreds of thousands of dollars, just to find out they're still on the hook for the payments.

One woman, who goes by the name of Anne, told Business Insider her story this week.

The 46-year-old woman was told her nearly $200,000 debt balance would be gone due to Biden's student debt forgiveness plan for public service workers.

Anne had paid her monthly payments since 2010 through the Public Service Loan Forgiveness program, which applies to those who make payments for 10 years, and now, finally, she had her full debt cleared.

"I actually didn't believe it," Anne told Business Insider. "I kept saying, 'I can't believe this happened. 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."

Read more: Student Loan Forgiveness Updates

Now believing her debt to be erased, Anne could finally start saving for retirement.

"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.

Then, months later, a letter from student loan servicer MOHELA arrived on her doorstep. The news was brutal: The loan had been cleared as a mistake, and she would still need to pay nearly $192,000 back.

"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 said, as reported by Business Insider. "Your account has been corrected and updated as explained below. We sincerely apologize for any confusion these errors may have caused."

The letter went on to say that Anne's loan had an incorrect end date to her employment history, which altered the number of qualifying payments she had listed.

Anne is now unsure where she can cut down in her budget to afford the total of $192,000 in unpaid payments.

"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. "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."

Newsweek reached out to the Department of Education for comment via email on Wednesday.

Anne's experience is unfortunately not unique. Many other borrowers have come forward saying MOHELA or other loan servicers said their student debt forgiveness was granted in error.

"It just doesn't make any sense. There was no notice to borrowers. I had no notice that this was a possibility," Anne said. "I've lived my life for eight months, but I would've done things differently than I had, had I known."

Alex Beene, financial literacy instructor for the state of Tennessee, said we're likely to see more and more mistakes happen like this as more pathways to loan forgiveness are introduced at both the federal and state level.

A few months ago, President Joe Biden announced 74,000 new borrowers would see their student debt disappear as the Education Department offered an additional $5 billion in forgiveness. This was made available for 44,000 public employees and tens of thousands of borrowers who made at least 20 years of payments on income-driven repayment plans.

"Loan providers can have software that makes mistakes, and if they discover it, they'll definitely course-correct to collect," Beene told Newsweek.

Read more: How Much Financial Aid Can I Get?

If you do receive a letter claiming all of your debt is forgiven, you might have to double check the fine print before hosting any sort of celebration, he added.

"It's a good idea as a borrower to check base with your loan provider when forgiveness is issued to make sure you meet all of the terms," Beene said. "It could not only save you the burden of having to pay down the line, but the heartache that comes with it, as well."

If you received a notice that your student debt had been forgiven and then had it rescinded and would like to share your story, please reach out to personalfinance@newsweek.com.