Can you believe it?! Student loans for Prisoners and the Dead. Department of Education gives student loans to convicts while in prison or gives out loans to people pretending to be these convicts. A client of mine is unable to read or write effectively. He was incarcerated in Kentucky on or about 1-13-1987 for Assault 1 to serve a 10 year sentence. He was paroled on 10-6-1992. I couldn’t believe it when he walked into the office with a threat from a federal student loan collector (FMC) to seize his wages. The Department of Education had taken his tax refund for years. This is the only course the Debtor had after high school. The client claims he never signed for any student loan. He believes that the person who taught the course was convicted of forging for these loans in the students names back in the 1990s while the teacher taught the course.

The Client has filed 2 bankruptcy cases since 1992 listing these loans and has advised Department several times that the loans are fraudulent but the Department and their agents have refused to honor the bankruptcy discharge or process discharge request forms to discharge the loan as fraudulent. The Department of Education has seized multiple tax refunds and now threatens to seize wages. I don’t believe that the course he took while he was incarcerated was a qualified school that was entitled to the non discharge protection of 11 U.S.C. 523(a) (8) nor was the loan made by the Debtor. At this point the Debtor seems to have exhausted all the administrative remedies by attempting to file the Loan Discharge Application and being refused by DOE and or FMS a discharge and the refund of tax refunds seized since about 2000.

How bad the problem with student loans is?

It is just hard to believe that with 1.3 trillion dollars of student loan debt much of which goes unpaid and the government 5.8 trillion in debt as of today 4-7-2015 that we

  1. lend to people that cant pay it back and then
  2. complain about it when they don’t.

We don’t check whether the student can benefit from the courses being taught. We don’t even check very well if the person applying for the loan actually exists.   In the old days it was called voting the graveyard. Some student loans go out to people that don’t even exist or that are dead. The fraud complaint office for DOE is open just 2 hours a day only 4 days a week. Nice work if you can get it. hotline.html I know my clients identity theft happened years ago but how long does it take DOE to figure it out they got taken? In this case nearly 2 decades.

What is absurd is sometimes DOE even refuses to charge off a student loan after death of the student. Even when you furnish a death certificate they sometimes claim death has not been proven to their satisfaction and death could have been faked. What the real reason for such accounting is that it keep the charge offs down. It improves how their accounting looks.

I don’t think we will ever know how bad the student loan problem really is because they wont admit how bad it is.

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