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Mitch Lipka | Consumer alert

Bridgewater State goes after loans from decades ago

The campus of Bridgewater State University.John Tlumacki/Globe Staff/File/Globe Staff

Some 27 years removed from his last college class, Joseph McDonald hasn’t thought about student loans for a long time.

So it came as quite a shock a few weeks back when his alma mater, Bridgewater State College, now Bridgewater State University, told him he owed $1,800 for student loans he believed he had paid off decades ago.

At first, he said, he thought the bill was sent to the wrong person. Then, McDonald said, he thought it could be a scam.

After talking with someone from the billing company hired by the college, he said he knew they had the right person. But he couldn’t understand why he was being charged for a loan he said he knows he paid.

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“It’s hard to prove what you paid so long ago when your bank does not even exist anymore,” said McDonald, 50, of Bradford.

McDonald has plenty of company. Bridgewater State said it billed 1,900 former students $1.9 million after an internal review found that students “not properly separated” from the school were never billed for their loans.

Both McDonald and former student Luigina Coco, 66, of Bridgewater, who received bills for loans from 1989 and 1993, said they were told if they failed to pay the amount owed, their credit would be damaged. So they are trying to get the school to back down rather than pay old debts they don’t think they owe.

“I believe I paid this bill but, of course, have no records dating back 26 and 23 years ago,” Coco said. “I can’t even remember what bank I was doing business with at that time.”

Both said they’ve had a hard time getting answers. A spokeswoman for the school said the collection attempt has rattled some of its former students but insists the debts are real.

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“Obviously, the letters have generated a great deal of surprise given the time lag as well as concern regarding their validity,” Bridgewater State spokeswoman Eva Gaffney said.

The school has used the same billing company, University Accounting Service, since the 1970s, and the review found no evidence that any of the group of former students had ever been asked to repay the federal Perkins Loans issued between 1984 and 1994, she said.

“During its own internal review of its financial system, Bridgewater discovered a processing error that resulted in the failure to identify some students to enable timely collection of the loan,” Gaffney said in a written statement. “No funds went unaccounted for throughout the process.”

A letter sent to those the school says must repay loans said a review of the Perkins Loan program was undertaken by Bridgewater State along with University Accounting Service and the US Department of Education. That’s where the discrepancy was found. Bridgewater State stopped participating in the Perkins Loan program last year, the school said.

An executive at University Accounting’s parent company, Transworld Systems, did not respond to requests to comment on the situation Friday.

The majority of the loans are in the $500 to $600 range, Gaffney said. She added that 15,000 students had received Perkins Loans since 1958 — meaning that the school has no record of billing close to 13 percent of all recipients of the loans. The school said it would not charge back interest.

Most debts have a statute of limitations attached — generally six years in Massachusetts. But this is a federal student loan, and the statute of limitations does not apply. And the law that applies to Perkins Loans puts considerable pressure on educational institutions to go after unpaid loans.

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Those who default on student loans face a hit to their credit score if the loan is reported as delinquent. And, because they are federal loans, the government could authorize collecting the owed money by taking tax refunds (state or federal). Collectors also can seek approval to collect by garnishing wages.

Still, the idea of coming after people decades after failing to collect on a debt — even assuming the debt is valid — is wrong, said Barbara Anthony, a senior fellow at Harvard’s Kennedy School of Government, attorney, and former head of the state Office of Consumer Affairs.

“This is ridiculous,” she said. “I think it is grossly, manifestly unfair.”

A legal doctrine could be argued that so much time has gone by it is no longer reasonable to hold the former students accountable, Anthony said. It is, after all, a problem that dates back more than two decades.

For those who believe they have paid these loans, Anthony suggests sending to the collection company an affidavit — a notarized letter reciting the facts as you know them. That would include acknowledging the loan and explaining what steps have been taken to try to find records of payment (that involves a call to your bank or its successor no matter how much of a long shot it is).

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Bank records are typically not maintained for more than seven years. The most recent loan being collected on is 21 years old.

Anthony also suggested trying to enlist the help of a federal agency, politician, or consumer group to champion the cause. In addition, the US Department of Education has an ombudsman’s office that is charged with looking into payment disputes.

Some of the former students have reached out to Senator Elizabeth Warren’s office for help. Warren’s office said it is aware of the situation and is trying to figure out what can be done to help.

Gaffney, spokeswoman for Bridgewater State, said since the notices went out, some have paid, while others have objected. “Certainly, the university is continuing to address individual concerns as they arise.”

McDonald said he vividly remembers paying off the debt because it was the first one he had ever incurred. And he is frustrated that the supposed proof that he and others owe the money is the absence of records.

“Right now, it’s their word against mine,” he said, something McDonald noted isn’t comforting.


Mitch Lipka can be reached at consumernews@aol.com. Follow him on Twitter @mitchlipka.