Consumer complaint received 2018-08-26
Product: Debt collection — Private student loan debt
Issue: Attempts to collect debt not owed — Debt is not yours
Company: AES/PHEAA (NC)

On XX/XX/2004 a private student loan in the amount of {$25000.00} was disbursed to my mother by American Education Services ( AES ) and/or a lender represented by AES. To date, 14 years later I am still completely unaware if AES was the original lender or simply the servicer on behalf of the lender, all I know is the American Education Services/XXXX  XXXX XXXX ( AES/XXXX ) appears on my credit report regarding the account in question. 

At the time of origination, I was XXXX years old and under the impression I was signing forms for my federal financial aid and did not realize I was signing a credit agreement for a private student loan. It was not until some time after the fact that I learned what had actually occurred. On multiple occasions throughout the years I have contacted AES requesting that the account associated with the loan be updated to remove me from the account. I explained to AES that I did not recall completing/submitting the initial application for the loan and when I signed the credit agreement I did not understand what I was signing the document had been misrepresented to me as a financial aid form and not a private loan agreement. I also informed AES that I had personally never seen any documents or disclosures related to the loan, the funds from the loan were not utilized to fund any portion of my education. And most importantly AES and/or the lender never actually disbursed the loan to me ( borrower ) but instead disbursed funds directly to my mother ( co-signer ) and as a result I demanded that the account be updated to reflect the correct responsible party to whom which {$25000.00} was disbursed. AES refused to provide any form of assistance even though I stated that myself and the party who physically received the funds were willing to sign any required documents to have me removed from the account. It was not until my last attempt at requesting removal that a customer service agent at AES/XXXX informed me that he didn't think they could update the account to remove me and name my mother as borrower because the original loan was a " student loan '' and should have been accessible only to students enrolled in a higher education program. He shared that even though my mother had maintained all payments on the loan because was not a student at the time he didn't think he could correct the account. 

After receiving this information a few years ago I realized that AES/XXXX  was not willing to update the account because it would force someone ( lender/loan officer etc. ) to be held accountable for utilizing deceptive lending practices. Although it's been 14 years since the loan was initially disbursed I am reaching out to CFPB because until now I failed to possess concrete proof that the loan was never disbursed to me. The original AES/XXXX account has now gone into default and since been sold to XXXX XXXX XXXX ( XXXX ). 

After receiving calls from XXXX, I submitted a dispute letter stating that although AES had not removed my name from the account the debt did not belong to me and requested that they contact my mother ( co-signer ) regarding repayment of the debt. I inquired as to options and or arrangements my mother could utilize to settle the account because I refused to provide XXXX with any of my information because I never received the loan in question. I told XXXX that although my mother is working now she initially fell behind as a result of job loss and a decline in her husband 's health but if they contacted her to make arrangements I be willing to assist her, if necessary, because I am sympathetic to the circumstances that led to her current financial state however because I never received the loan in question I refused to take personal responsibility for the matter. It was at that time I was told by XXXX collection agent XXXX XXXX that after reviewing the credit and assets of myself and my mother, XXXX has decided to solely pursue me for the debt because based on my mother 's current credit she would not be able to access another loan to cover the balance of the defaulted account. Mr. XXXX told me I either needed to charge the balance of {$17000.00} on my credit cards, obtain a personal loan to cover the balance dues or refinance my home to access funds to cover the XXXX account all to which I told Mr. XXXX he was crazy. Mr. XXXX provided me a settlement offer of $ 13,000+ which I refused because I told XXXX the debt not mine and under no circumstances would I take out a personal loan for which I'd be responsible for repayment to cover a debt that is legally not mine. At that point Mr. XXXX stated since I was not willing to do any of the options he suggested, he would report to XXXX that I was unwilling to resolve the debt so they could begin steps to sue me for the balance. 

It was not until after I received a packet of information from XXXX attempting to validate the original debt and the sale of the debt from AES/XXXX to XXXX that I realized AES/XXXX has been in possession of documentation that verified the loan was never disbursed to me ( sole borrower listed on the account ) and as I suspected my request for removal from the initial account were not honored in efforts to cover the deceptive lending practices utilized by the original lender/lending officer. At the time the loan was disbursed my mother had been out of work for a short period of time due to a XXXX. It was my suspicion that the loan officer utilized deceptive practices to justify disbursing a loan to a party that did not qualify for the purpose of increasing the number of loans that he/she processed and closed. In essence the loan officer used my status as student as a loophole to provide a " private student loan '' to my mother who was not a student and therefore not eligible to apply for and/or receive the student loan. It is clear on the credit agreement which we both signed I am listed as borrower ( sole borrower ) and my mother is listed as cosigner. At the time of disbursement, I was of legal age so in accordance with credit/lending practices funds associated with the loan should have been disbursed directly to me. It is my assumption that the original lender/loan officer hoped everything would remain intact in terms of my mother 's employment and her ability to repay so that the lending discrepancies would not be highlighted. In an effort to " justify '' disbursing the loan to someone other than myself, on the lenders " note disclosure statement '' they identify myself and the party who received funds as borrower ( s ), although our signatures are not on this form, however in the credit agreement which both parties signed, I am identified as borrower and she as cosigner. According the Credit Practice Rules outlined on the Federal Trade Comission 's website for businesses located at : https : //www.ftc.gov/XXXX The section subtitled " Notice to Cosigners '' reads as follows : A " cosigner '' is different from a co-buyer, co-borrower, or co-applicant because a cosigner receives not tangible benefit from the agreement, but undertakes liability as a favor to the main debtor who would not otherwise qualify for credit. On the other hand, a co-buyer ( one who shares in the purchased goods ), a co-borrower ( one who shares in the loan proceeds ), or a co- applicant or co-cardholder ( a person who is authorized to use a credit card account ) do receive benefits. Therefore, they are not considered cosigners under the Rule, and you are not required to provide the notice to them. 

As a result I'm confident that the lending agency was aware and the loan officer should have been aware that a cosigner does not possess tangible rights to the goods/funds associated with a loan, a cosigner simply guarantees repayment of the debt associated with the loan. Because I now possess proof of what I've stated all along in that I never received the loan, I've again reached out to XXXX XXXX XXXX and American Education Services and again requested that they remove me from all accounts. In addition I have also requested to AES/XXXX, XXXX, XXXX, XXXX and XXXX that the accounts for both AES/XXXX  be completely removed from my credit history. The original credit agreement should have been deemed null and void upon disbursement in 2004 because the lender failed to adhere to the terms by disbursing the loan to someone other than the assigned borrower. I also requested that the both AES/XXXX and XXXX accounts be removed from my credit history because for years my credit score and creditworthiness have been negatively impacted by the initial delinquency on the AES/XXXX account and now more so by the default status and collection account that have added all in connection with the original AES account that I should have been removed from.