Woman's on the Hook for a $25,000 Student Loan She Never Knew Existed

Courtesy Alice Cortes via Business Inside

Alice Cortes, 57, would be able to end her $25,000 student loan nightmare if only she could answer one question:

Who is Jorge Torres?

According to private student lender Sallie Mae, Torres was listed as a co-signer on the $13,000 Parents PLUS loan they issued to Cortes on behalf of her son, Brandon, in 2002. At the time, Brandon had enrolled to study IT network administration at the for-profit technology school Chubbs Institute in New York.

But as far as Cortes knows, Jorge Torres doesn't exist. To top it off, she had no idea a student loan was issued under her name at all.

The Confusion Begins

"When applying for financial aid (my son and I) were told that before he could be considered for any other aid, I had to apply for a parents loan," says Cortes, who was accepting welfare assistance at the time. "When I filled the application, I told the financial aid office there's no way they're going to approve this. How can you make a loan for that amount of money to somebody who's making $13,000 a year?"

Time passed, and when she never heard back from Sallie Mae, she assumed her hunch was right –– she wasn't a viable loan candidate.

Her son completed his nine-month program with no questions asked, and they figured federal student aid had been enough to cover the bill.

Then in late 2004 Sallie Mae came calling, with their lawyer in tow. The lender claimed they issued her a $13,000 loan and sued her for defaulted payments. According to the loan application included in their complaint, Cortes had applied for the loan with a co-signer by the name of Jorge Torres.

"I never lived with any male by the name of Jorge Torres," says Cortes, who by that time had moved to Florida after being laid off from her job in New York. Someone by his name had signed the promissory note, however, and listed her income as $20,000 per year, about double her actual earnings.

But that wasn't enough to convince Sallie Mae. A Florida court upheld a ruling in New York in the lender's favor in 2010. Cortes was on the hook after all.

"In December, they filed for a ($360/bi-weekly wage) garnishment with no notice to me whatsoever," she says. "I asked their attorney for a copy of the promissory note (for the original loan) they claim I signed ... While the signature is close, it does not appear to be mine."

We reached out to a Sallie Mae spokesperson, who declined to comment on the alleged forgery but offered this statement:

"We thoroughly investigated and found no evidence to support the claims. In fact, a court evaluated the case and found that wage garnishment was appropriate."

Unable to afford an attorney to defend herself, Cortes is running out of options.

"Their actions forced me to move in with my son and have resulted in even more serious damage to my credit," she says. "Now to add insult to injury, Sallie Mae has turned this over to (debt collections agency) Allied Interstate for additional collections in spite of the fact that they are garnishing me."

A Familiar Story

Private lenders stand to make a lot of money by selling defaulted loans like Cortes' to collectors, a practice that netted the industry $20 billion in 2008 –– four times the $5 billion it made in 2001, according to the Consumer Financial Protection Bureau. And since private lenders can jack up interest rates by as much as 25 percent, defaulted borrowers are all the more lucrative for business.

So far, Alice's total wage garnishments have exceeded the $13,000 original loan balance. She has $12,000 left to go––plus whatever interest accrues in the meantime.

Experiences like hers are why the CFPB has planned to more stringently police the private and for-profit college sector, which has been accused of the same risky lending practices as big banks leading up to the housing crisis.

Chubbs Institute, which was bought by private-equity fund Great Hill Partners in 2004, was sued by former students the same year on grounds the "school promised more than they could deliver," according to the Washington Post.

Cortes might agree.

"I can't afford what they're doing to me. I don't want to live with my son," she says. "He needs a life that's separate and apart and they've made it damn near impossible for that to happen at this point."

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This poor woman needs to go to the office of the district attorney for her county and swear out a charge against the CEO of Sallie Mae for fraud. She does not need a lawyer. Use the one provided for criminal prosecution by your state government. The DA will quickly and efficiently sort out the forgeries which have occurred ( if they are actually forgeries) and charge the crooks ( whether they are Sallie Mae, banks, for profit schools or individuals ).
My guess would be the marketing department of the for profit school had a scheme cooked up with insiders at some bank issuing SM guaranteed loans and both were splitting finders fees for the loans.

August 02 2012 at 10:20 AM Report abuse rate up rate down Reply

The whole US college industry is a scam - along with the banks, publishers and numerous other US corporations and greedy entities. The politicians are the most shameless pimps you can find [outside of Africa or Asia?] Consumer protection is minimal, privacy is non-existent: every SOB and his dog knows all about you and the shameless ****** sell your information to anyone with a dollar or two to pay. What a hideous place it is. The government wastes trillions it doesn't have on wars it can't win sending the sons of those without connections to their doom in the name of Freedom which hardly exists.The Constitution is a joke - a party piece - without any credibility at all presided over by a political class that would probably have been rejected by the people who wrote it. It is, in short, a country of liars, thieves, criminals and fools. And rightly despised.

August 01 2012 at 8:31 PM Report abuse rate up rate down Reply
Michelle Fogle McMah

This is why I check my credit report every year for FREE. www.annualcreditreport.com it is all FREE. I have been doing it for years. About 5 years ago, there was a FRAUD alert put on mine because someone else with a different address had a CBC phone out of Cleveland and was on my report as default. It took 2 years to clear it up. Wasn't my fault and had to get the police involved because it was a forgoery. CHECK YOUR REPORTS!

August 01 2012 at 9:56 AM Report abuse rate up rate down Reply

Number one, to be considered for "any other aid" the parent does NOT have to apply for a "Parent PLUS loan." Number two, Ms Cortes stated "while the signature is close, it did not appear to be mine." seems to me the school ( a FOR PROFIT "institution" ~hello) & Sallie Mae are shady crooks (look at Sallie Mae's criminal record). Shame on all involved.....people need to educate themselves on the Financial Aid process....it's scary~
@shybyme, how did your daughter obtain a loan in your name but you didn't sign for it? This is why our system is so messed up..did she forge your signature? Good luck because you WILL be liable for repayment.

August 01 2012 at 9:38 AM Report abuse rate up rate down Reply
1 reply to msuhiexlisa's comment

sure it's ALL FRAUD..... then how the hell did her kid ATTEND THE SCHOOL,never get a THING INRE HIS OUTSTANDING LOANS,grant application,amount of the GRANTS AS APPLIED TO THE LOAN etc etc---they had NO PAPERWORK,right ?
entire storie's a LOAD of IT.
and of course THEIR POSTER CHILD'S latinA.

August 01 2012 at 7:25 PM Report abuse rate up rate down Reply

I feel bad my daughter has a student loan in my name as well 20,000.00 dollars I didnt sign for it because I told my daughter that am on low income budget at 10,000.00 a year but i cant manage by myself..

August 01 2012 at 8:38 AM Report abuse rate up rate down Reply

The student loan program is a scam. What they don't tell you is that they will loan you money to go to any school without investigating what whether a school is legitimate. This is a diservice to students.

August 01 2012 at 2:03 AM Report abuse rate up rate down Reply
1 reply to leavesbound's comment

real SCAM REMAINS these schools enrolling totally UNQUALIFIED people.keeping them ENROLLED for at least 10 weeks before "cutting"
them due to failing grades and loans NOT GOING TO FAILING STUDENTS at these PRIVATE schools but keeping their first quarterly tuitions and the students are still stuck with paying them back.

August 01 2012 at 7:33 PM Report abuse rate up rate down Reply

When your loans go into default don't they go after your co-signer? I'm pretty sure you need a social security number for them to check your credit history on a co-signer, especially if it's a Parent PLUS loan, so...wouldn't this Jorge have a SSN? An identity?

July 31 2012 at 4:19 PM Report abuse +1 rate up rate down Reply
1 reply to Mak's comment

LOL--you missed the part where she states she NEVER LIVED with him ?????she dunno no whorehey ????

August 01 2012 at 7:27 PM Report abuse rate up rate down Reply
Joe Acerbic

Is it so terribly difficult to guess who made up the co-signer and any forgery? Just think: who ended up with the money?

July 31 2012 at 3:21 PM Report abuse +1 rate up rate down Reply
1 reply to Joe Acerbic's comment

but of course the chubby latinA will get a pass simply for being a chubby latinA.

August 01 2012 at 7:30 PM Report abuse rate up rate down Reply

The US government is a bunch of crooks and scam artists. All you have to do is go to any court or traffic court and watch what happens to know what goes down and how they operate. First they scare people, then they slander them and criminalize them, then they say either you pay this big fine or you go to prison. It works, most people are terrified of their govenrment, which has garnished all the weapons to themselves and bought the biggest ones they could of with taxes. Too many idiots paid their taxes to make the thugs go away, only that never works, the thugs use the money to buy more and bigger guns and come back to the patsies for more. American's are stupid and non-revolutionary as F***.

July 31 2012 at 2:10 PM Report abuse rate up rate down Reply

Fingerprints on the promissory note should sort this out.

July 31 2012 at 1:48 PM Report abuse +3 rate up rate down Reply
1 reply to davidwr's comment

That is if the original can be found (most times it's not). That process is also very time consuming, and most law officials will not take the time to actually do it.

August 01 2012 at 1:14 PM Report abuse rate up rate down Reply