A student-loan borrower who received debt cancellation a year ago was just told it was a mistake — and now his $93,000 balance is reinstated

• Okwara, 37, received a letter from MOHELA in May 2023 confirming his loans were forgiven.
• But on February 29, MOHELA sent a letter telling him the relief was a mistake, and his balance was reinstated.
• "We sincerely apologize for any confusion these errors may have caused," MOHELA said.

Okwara, 37, received a notice from his student-loan company in May 2023 that his entire balance was wiped out.

"Congratulations!" the letter from his servicer MOHELA, reviewed by Business Insider, stated. "We determined you have successfully met the requirements of the PSLF Program and your loans listed below have been forgiven. Thank you for your public service!"

This relief was a result of payments Okwara — who requested his last name be withheld for privacy — made through the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.

For Okwara, the relief meant he could finally afford key purchases for himself and his family and pay off his private student loan.

"We started making investments and bought a house; we did all these things within this nine-month period," he told BI. "We could afford to send our son to preschool based on our income level."

Okwara made those investments because he no longer had to worry about his student loans — or so he thought. On February 22, 2024, he received an email from MOHELA stating that his loans were on administrative forbearance and he still owed PSLF payments. On February 29, he received a letter that confirmed exactly what he feared: the forgiveness was a mistake, and his $93,000 balance had been reinstated in full.

"On 05/28/2023, we sent you a letter in error stating we determined you successfully met the requirements of the Public Service Loan Forgiveness (PSLF) Program and your loan(s) had been forgiven," the letter, reviewed by BI, said. "You should not have been sent a letter stating your loan(s) were forgiven as your loan(s) do not yet qualify to be forgiven."

"We sincerely apologize for any confusion these errors may have caused," the letter said.

MOHELA did not respond to a request for comment from BI. An Education Department spokesperson did not comment on the forgiveness reversals but told BI that "the Department will not stand for egregious servicer errors that have harmed borrowers and perpetuated problems in the broken student loan system."

"While we continue our work toward more fundamental reform, we will continue to aggressively monitor loan servicers to identify errors, protect borrowers from any consequences, and hold servicers accountable," the spokesperson said, referring to an accountability framework it released at the end of last year to bolster oversight over all servicers.

Okwara, however, will now have to reconfigure his budget to once again pay student loans he thought he no longer had to deal with. Per his online dashboard, he's set to pay $861 per month when his payments resume.

"We just have to sit down and do our budget and figure out what we have to go back on because we have a mortgage now and everything that goes with owning a house," he said. "We bought a house in October thinking that we actually could afford it and actually do all these renovations that we were able to, and now we might have to stop on that."

'Where's that money going to come from?'

Once Okwara saw his loans were on forbearance — before he received the official letter from MOHELA informing him that his forgiveness was a mistake — he managed to get ahold of a customer service representative who told him that his payments were counted incorrectly when he submitted the temporary PSLF waiver that expired in October 2022.

The waiver allowed any past payments, including those previously deemed ineligible, to count toward PSLF progress. However, the representative told Okwara that MOHELA detected errors in about 500 borrowers' accounts that counted payments for borrowers during times when they were not working for a qualifying employer.

While the Education Department and MOHELA have not confirmed the number of borrowers impacted, some of them have been sharing similar experiences on social media, expressing confusion that they now owe student loans after confirmation that their balances were forgiven.

Okwara isn't sure what he's going to do next. According to his account, his forbearance period is set to expire on April 21, after which he said MOHELA advised him to get on an income-driven repayment plan to begin making payments again.

"When I got those letters that I have to start paying these back," he said, "I'm just thinking like, 'Where's that money going to come from?'"

Did you get a notice that your student loans were reinstated after receiving forgiveness? Share your story with this reporter at [email protected].