My Federal Student Loan Debt Can’t be Validated But They Are Collecting Anyway – Emma


Dear Steve,

Student Loan — originally with Sallie Mae. Details as follows:

1. In default since 2011. Sallie Mae was purported to have taken over by Navient.

2. In or about 2014 — three entities tried to collect — Sallie Mae/Navient, PHeaa (as guarantor), and a DEBT collector purporting to collect for PHeaa.

3. Issued Debt Validation Letters to All three institutions. Only got a copy of an electronic application (with Sallie Mae). No responsive answers to 99.9% of the DV questions.

4. PHEaa responded — indicating account is transferred to Debt Collector.

5. Debt Collector could not validate account. Informs it is being closed and no report made to Credit Bureaus.

6. PHeaa attempts to collect again – in tandem with Navient/Sallie Mae. Navient at this point makes an “offer” to settle — about $6K or so for a purported $40K+ student loan (made in 2004…original 30K+? could not remember. No accounting of payments is available from any of these institutions who failed to validate debt.)

7. PHeaa finally sends letter indicating it purchased the alleged loan, thus, its “status as a guarantor” has now changed to OWNER of the”student loan debt.” (Reissued DV – but PHEaa continues to fail to properly validate debt.. At this point, PHeaa is “considered a debt collector” covered under FDCPA..for purchasing a defaulted account.”)

7. Lodged Complaint with Consumer Finance Protection Bureau against Sallie Mae, and PHEaa.

8. Sallie Mae then removes any record from Credit Bureau.

9. Navient updates the same on credit bureau report – indicating account has been closed, transferred. (although, it does not show any amount owing on the credit report, as well as any payment information. No payment information could be reported because there is/was no transaction between Navient and debtor.)

10. PHeaa then makes an “attachment?” to IRS Refund. Has taken about $9K refund this year.

See also  Should I Just Let My Cosigned Navient Student Loans Go to Collections and Try to Settle them?

PHEaa’s “attachment” (forgot the term) to IRS refund – is this lawful considering as a “debt collector” it failed to validate the debt?

If it is unlawful – what is my recourse? Besides lodging another complaint to CFPB or FTC? I see CFPB is cracking down on unlawful practice in student loan industry.

Any advice – much appreciated.

Thank you,



Dear Emma,

Wow, you rock. You’ve got a really good grasp on all of this stuff.

The best way to avoid a tax refund intercept is to not get a tax refund. Just adjust your withholding so you break even at the end of the year and their is no refund to grab.

The issue with the debt validation and Administrative Wage Garnishment is the federal government does not need to go to court to garnish your wages. So if the default triggered government agent for this debt

But you have a very good issue about the inability or lack of validation of the debt.

I would encourage you to contact a consumer advocacy attorney who is licensed in your state and ask them to intervene in the validation process. They will charge a fee but they may also be able to unwind the tax refund intercept since this can’t be proven to be a valid debt.

One place to look for just such an attorney is here.

But the validation question is an interesting one. I discussed this issue with a number of people inside and outside of government. All agreed that the government will rely on what is reported on NSDLS as the basis for validation.

But what we have is a broken process. When it comes to tax refund intercepts there is a process where a request is put into the Department of the Treasury and then it just happens.

My personal opinion is you’ve raised some good points that have confounded some, including me. It seems there should be a better process for the government to validate debt but then again they get to write their own rules.

See also  Navient Enters Massive Student Loan Forgiveness Settlement. Details Clear-ish.

So I’m going to have to suggest if you think your federal loans were not properly validated, you must seek the assistance of an attorney who is licensed in your state.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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