I’m a Veterinarian With Some Mystery Student Loan Debt


Dear Steve,

This is about an unpaid private loan balance of approximately $80,000 (including interest) from a public veterinary school I attended from 2007-2011. The following info is NOT my question, but I’m providing it in case it’s relevant.

Approximately $3000 of it had been unofficially disputed to the school with the help of the university’s student attorney in 2011, and then again in 2013 by me to a credit agency, as an illegitimate claim: a few weeks before graduation–after all my loan funds were spent–the school suddenly told me they had “made a mistake” in not charging me for credits taken, and I was responsible for the additional tuition.

(They withheld my diploma and confirmation of graduation for non-payment, which prevented me from obtaining my medical license for several months. They eventually agreed to issue the confirmation but never acknowledged that they made a mistake about the additional tuition charge–and never gave me my diploma).

I have received a letter from my veterinary school (a public institution) which says that my loan + interest of $79,180.10 from 2007-2011 was returned by the outside collection agency they had been using. They advised me that the next steps the school can take are either 1) assign it to another collection agency or 2) assign it to the federal government for collection. The time allowed by Washington state for them to sue me expired a few years ago, and the loan dropped off my credit report as well.

Since this is NOT a federal loan, then why would the government pursue collection on their behalf? (I have been in federal loan rehabilitation for about a year now, and as a result, my credit score is “very good” for the first time in my life–I just turned 50–so I don’t want to ruin that or, worse, find myself in a default situation with the federal government again since I can’t afford to pay more.)

Thank you for your help and for all the things I’ve learned from your newsletter over the years.



Dear Ren,

Your kind words made my day. Thank you.

Wow, this is a bit of a riddle, wrapped in a mystery, inside an enigma.

The definitive way to see if the loans in question were in any way some federal student loan would be to log on to the National Student Loan Data System (NSLDS). If the loans aren’t federal loans, they will not be listed. NSLDS is the definitive repository of federal student loan data.

The only possibility that comes to mind where a federal student financial obligations that could wind up back at the school and then go to collections would be for something that is actually not a loan. A Pell Grant is a good example. It is not a loan but would need to be repaid if you withdrew from school, changed your enrollment status, or no longer qualified for the grant due to other aid, loans, or grants. But that is a technicality and not a common reality.

But from what you said, it sounds like the mystery debt was actually a loan from the school since they felt they could withhold your diploma and possibility transcript. That is the type of thing a school will do to protect their collateral. With federal student loans, they already got paid and would not withhold things.

If that is the case, I’m not sure how they would assign it to the federal government for collections. The government has no authority to collect on private student loan debt. A school owed debt can be eliminated with bankruptcy and immediately free your diploma or transcript.

I would approach this using your medical skills. Ask for more data and facts before we leap to a conclusion. However, at this point, there is clearly something the school is saying that does not appear to add up. We need some more “diagnostic tests” to understand the patient’s condition, leading to a diagnosis.

Please come back and post an update in the comments section below with what you learn and uncover. I really want to help you get to the bottom of this.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

4 thoughts on “I’m a Veterinarian With Some Mystery Student Loan Debt”

    • Hi again Steve.

      I found some clues in my NSLDS account as you suggested, and made significant headway, but I still don’t think The Mystery of the Cursed Loan has been solved. Here is what my Nancy Drew sleuthing uncovered:

      Clue 1: I am in default for a Perkin’s loan of $1,468 from the University of MN. I have not received any communication from the school or a credit agency for this specific amount, or any other amount identified as a Perkin’s loan.

      I assume that the reason I don’t remember this loan is because it would have been removed from my credit report in 2019: the details listed are that I entered a repayment agreement on 3/1/2012 (the original amount is not listed) and then the balance went into default on 6/1/2013. But 2019 would have been more than 7 years from the original debt: I graduated in 2011, and vet school is 4 years. And even more confusing is that in 2018 I started a list of all my outstanding debts of low amounts that I would be able to pay off in a few installments, and this is not on my list.

      Clue 2: Since my federal loans from the ‘90’s are still listed on my 2020 credit report but the University of MN’s claim of $376,098 (267,506 principal) is not–including in any of my Navient consolidated loan amounts–I also assume that this is NOT a federal loan. Am I correct?

      So here is a new conundrum/question: I’d like to pay off the $1,468 at some point in the near future, but can’t right now because I am still living on unemployment since losing my job last February–which after 2 extensions is set to expire in March (I’m confident that President Biden will enact another federal extension, but it still won’t be enough income for me to pay the full balance at once.)
      For past small debts, I had simply sent checks toward my balance to the credit agencies that held them whenever I could, (e.g. $50 toward a $200 debt), deciding the amount I sent myself without asking the credit agency, so I could avoid entering a formal payment agreement that I might not be able to stick to.

      In this case, since the Perkin’s loan has been returned to the university, does that mean I’d have to deal with them directly? I haven’t responded to any of their requests for repayment of the huge amount over the last year, because mentally and emotionally, not to mention practically, I just can’t deal with another financial issue right now. (And I’m sure you won’t be surprised to learn that even with the Navient REPAYE program, the amount I will have to pay on my federal loans to avoid a second default would leave me with only $800 a month–which is less than half of what my rent is, so that would mean no food, no electricity, and other absurd things that would pretty much result in my living on the street. I have a forbearance for a year, which would start after the COVID extension ends. But after that, I’m pretty much screwed.)

      Thoughts? Suggestions? Sympathy?

      Thanks again,
      P.S. If you continue to help me with this mystery, I think that will officially make you a “Hardy Boy.”

      • Hardy Boy, Ha Ha Ha.

        President Biden has already indicated the payment holiday will continue, I just don’t know how long it will last. But you are safe for now.

        Sympathy? You bet. I get it that it seemed like a wonderful idea for the government and others to pass out easy money, ramp up school costs, and saddle people with a lifetime debt. Only one problem, this kind of mess.

        With a Perkins loan, once it goes far into default, it will be returned to the school. The Department of Education says, “If a borrower is unresponsive and required billing procedures have been exhausted, your school will need to institute more
        intensive collections procedures. You must make a first effort to collect using either your own personnel or hiring a collection firm. Before beginning collection procedures, you must attempt all of the required contact methods described previously. You must also report the borrower to at least one nationwide credit bureau. If the school’s personnel or the collection firm cannot convert the account to regular repayment status by the end of 12 months (or if the borrower does not qualify for forbearance, deferment, or cancellation), you have two options—either to litigate or to make a second effort to collect.”

        They also say,”To avoid litigation, a school may offer to waive collection costs as incentive for repayment. You may waive all collection costs on a loan
        if the borrower makes a lump-sum payment of the entire amount outstanding, including principal and interest; a written repayment agreement is not required. You may also waive a portion of the collection costs on a loan if the borrower agrees to pay a corresponding portion of the loan within 30 days of entering into a written repayment agreement with the school. For example, if the borrower repays half
        of the outstanding balance on a loan within 30 days of the agreement, the school may waive half of the collection costs incurred through the date of that payment. The amount of waived collection costs may be charged to the Perkins Loan fund.
        You may compromise the repayment of a defaulted loan if you have fully complied with all due diligence requirements and the borrower pays, in a single lump-sum payment, at least 90% of the outstanding principal balance, plus all interest and collection fees. The federal
        share of the compromise repayment must bear the same relation to the school’s share as the Federal Capital Contribution (FCC) bears to the Institutional Capital Contribution (ICC).
        A borrower may rehabilitate a defaulted Perkins Loan by making nine consecutive, on-time, monthly payments. A rehabilitated Perkins Loan is returned to regular repayment status. (See Default Status and Perkins Eligibility later in this chapter.)
        A borrower may include his or her defaulted Perkins Loan in a Direct Consolidation Loan. The amount eligible for consolidation is the sum of the unpaid principal, accrued unpaid interest, late charges, and outstanding collection costs. A defaulted loan that is being repaid under a court order remains in default status until paid and is not eligible for consolidation.” – https://getoutofdebt.org/wp-content/uploads/2021/01/1920FSAHdbkVol6Ch5_0.pdf

        So it appears the school could give you an opportunity to rehabilitate the Perkins Loan rather than have to pay it in full.

        If the Navient big balance is not on your NSDLS then that would indicate it is probably a private student loan. Does that sound possible?

        Since you have had a change in employment status, you should contact the servicer with your REPAYE account and ask for a new payment. It should be adjusted way down based on your unemployment. I would do that now even though you are on a payment holiday.

        The approach of sending what you can afford is double-edged. It won’t stop anything from happening. You are in default. But hopefully, you can get the debts paid off before it gets too far down the rabbit hole. A misperception people have is that any payment will prevent the account from defaulting. Not true. It will just slow the default.

        Please don’t take this the wrong way. I think the combination of the mental and emotional exhaustion and the complexity of the mystery debts can easily create an overwhelming situation.

        I strongly think you need someone to be able to talk to you and take a deep dive into the facts to try and get some clarity.

        You can contact anyone you want or ask a friend for help. One person to contact would be my debt coach friend Damon Day at https://damonday.com

        He is a very smart guy that can help you Harby Boy your way into clarity. However, be kind to him, he might not know who Nancy Drew and the Hardy Boys are. LOL


Leave a Comment