Department of Education’s Law – Failure to Provide Debt Validation Is an Indication of Illegitimate Demands

If the U.S. Department of Education demands student loan debt payments, but fails to validate the alleged student loan debt, neither the Department of Education, nor any other institution has the documents that would be needed for proving both the existence of the alleged debt and valid debt ownership.

That is, the U.S. Department of Education may carry any number of assets on its books that it does not actually own, because it cannot validate the debt and its ownership of it. However, legally, the corresponding alleged, but unvalidated debts as liabilities do not exist.

The debt that does not exist is not owned by anybody. Without anybody actually legally owning the alleged debt, the Department of Education does not have the necessary legally valid base for making monetary demands for nonexistent debt payments. However, in an individual case, until the U.S. Department of Education’s debt ownership claims and rights to make monetary demands have not been challenged, the U.S. Department of Education can continue to make the relevant claims and demands.

Until you don’t tell the emperor that he has no clothes, the emperor can continue to believe that you see him as fully dressed. The emperor can continue to believe that there’s something wrong with you, and not with him, even after you have pointed out all the relevant laws and rules of logic that are being broken, but that’s another subject matter.

Based on my close to two year experience with Mr. Arne Duncan, U.S. Secretary of Education representatives, I can say that this equation has worked as reliably as a law of nature. Failure to provide debt validation is an indication of illegitimate demands. So, perhaps I should call this Department of Education’s Law.

However, I’m just one individual. In order to call the above relationship between the U.S. Department of Education’s illegitimate demands and reality as Department of Education’s Law, we would need to know if this statement holds true for other people as well.

This makes me wonder, how many other such cases are there, where people believe that the monetary demands that the U.S. Department of Education makes are both legitimate and accurate, but in reality the demands are primarily based on internal computer records with unclear origin, misleading statements and abuse of the extraordinary debt collection powers granted to the Department of Education.

Mr. Duncan’s representatives are exceptionally good at issuing misleading statements that may make people believe that the Department of Education’s demands are legitimate. When I did dig deeper, I discovered that in my case there are no legitimate documents that support the demands for nonexistent debt.

So, I will elaborate on these topics below. In this and in other articles that will follow, I will provide information on how you can get truthful information from the Department of Education, and how to read between the lines and separate misleading statements from reality. All of this is based on my personal experience.

How Do You Know Whether or Not the Demands Are Legitimate?

If a student loan borrower has complete borrowing records and pays off the loans as expected, there is no problem. These are not the instances that are being addressed here. I am addressing here instances, where the Department of Education makes monetary demands, is being asked to validate the debt, and instead of debt validation offers a variety of general statements and unqualified documents.

If you or somebody you know has been contacted with student loan payment demands that for one reason or another seem strange to you, how do you know whether or not the demands are fully valid, unless you request debt validation from the Department of Education?

You can request debt validation, and you can submit Freedom of Information Act (FOIA) requests. However, as my case indicates, the Department of Education may not send you truthful information. So, in order to get some clarity into the situation, you want to think through and define what kinds of documents will really provide the needed information. In addition, you may want to ask the Department of Education representative to sign a statement under penalty of perjury, declaring that the information that the Department of Education provides is true.

Otherwise, you may end up paying more money than you actually owe.

If the Department of Education representatives refuse to sign a statement under penalty of perjury, and instead of copies of the needed original documents the responses you receive contain generalized statements, you may be in a situation where you are demanded to make payments on a debt for which the Department of Education does not have complete and valid support documents. The Department of Education may have computer records indicating that there is a debt that you owe, but how accurate these records are is anybody’s guess.

I am providing more information on this below.

Little Bit of Background

When you request debt validation from the Department of Education, you may receive similar “validation” as I did at first.

In my case, there are no documents that show that I have ever received student loans from Fleet National Bank, as the Department of Education claims I did. So, at first, instead of actual debt validation I received statements, such as

  • “Schools frequently apply the funds from student loans to enrollment expenses, such as tuition, fees and other school charges. Students frequently do not directly receive the funds.”

This was intended to imply, that maybe the college that I attended years ago also applied funds directly to the expenses, without me even being aware of it.

That’s it. That, and partial copies of my financial aid applications was the “validation,” intended to prove that I received $46,354.00 in federally guaranteed loans which I did not qualify for, and while the documented financial aid that I did receive exceeded the cost of tuition and fees, and I did not live in campus. Further, allegedly I received this money in order to attend from 1990-1991 to 1995-1996 school years state owned Rhode Island College as state resident, while the in-state cost of tuition between these years ranged from $1,703 to $2,838 a year.

If somebody contacts you, claiming that you owe money, would you agree that a debt exists, based on statements like the one above about schools applying funds to enrollment expenses without your knowledge?

In my case, the above statement is clearly not applicable. Further, no such statement is a substitute for real copies of real original documents. In the cases where the Department of Education claims that the Department of Education is the current debt holder (owner), the Department of Education must also have in its possession the relevant original documents.

Accordingly, Mr. Arne Duncan, U.S. Secretary of Education representative has repeatedly stated that the debt payment requests are based on the Department of Education holding legally binding original promissory notes.

However, based on copies of the paperwork that I have received so far over the last year and a half, it turns out that the Department of Education does not have absolutely any original documents that would conclusively validate existence of the alleged debt.

In my case, both the financial aid applications and portions of what are supposed to be promissory notes are on the same sheets of paper, as if the two were one and the same document. Of course, the legal requirements for promissory notes, which are debt instruments, are different from the requirements that financial aid applications must meet.

Article 3 of the Uniform Commercial Code (UCC) lists the requirements that promissory notes must meet. While states can modify UCC for their needs, the financial aid applications that I signed in the past clearly do not meet the requirements set for legally binding promissory notes. The documents that I signed in the past are simply financial aid applications. However, the Department of Education has been trying to serve up these applications as promissory note debt instruments.

Similarly, Mr. Duncan’s representative has issued statements, claiming that breach of contract gives the Department of Education the right to make monetary demands.

However, UCC Article 2 lists requirements that contracts must meet, and these requirements are not being met. There never was any legally binding contract, and, thus, nothing has been breached.

Further, in accordance with the common law and a previous case, the Department of Education is “in the shoes of the lender,” and can be held responsible as such.

In my search for original documents I submitted Freedom of Information Act (FOIA) request. At the request of the Department of Education, I signed and sent to the Department of Education a statement, declaring under penalty of perjury that the information that I have provided about this case is true to the best of my knowledge.

By making me to sign a statement under the penalty of perjury, while knowing in advance that the relevant information will be published on the Internet, the Department of Education created a precedent that both myself and other people can use.

That is, people who want to have assurance that they receive truthful information can ask the Department of Education representatives to sign similar statements. Hopefully, this way, over time we can steer the Department of Education in the direction where it makes monetary demands only in cases where it can legitimately and conclusively prove ownership of debt.

Below is a copy of the relevant letter sent to Mr. Arne Duncan, the U.S. Secretary of Education.

Seventh Open Letter Sent to Mr. Arne Duncan, U.S. Secretary of Education

A copy of the letter published below was delivered to the following people and institutions:

  • - Arne Duncan, U.S. Secretary of Education, USPS Delivery Confirmation EM746183009US
  • - Naomi Randolph, Special Assistant, Operations Services, Federal Student Aid, USPS Delivery Confirmation EM746183030US
  • - Paul E. Leary Jr., CEO, Collecto, Inc., d/b/a EOS CCA, USPS Delivery Confirmation EM746183026US
  • - Brittiany Leary, Senior VP of Operations, Collecto, Inc., d/b/a EOS CCA, USPS Delivery Confirmation EM746183012US

Mr. Arne Duncan, U.S. Secretary of Education

U.S. Department of Education

400 Maryland Avenue S.W.

Washington, DC 20202

Dear Mr. Duncan,

Thank you for your letter dated 09/12/13 that your assistant sent to me on your behalf regarding your coercive demands for payments on nonexistent debt that the Department of Education does not own, your purposeful usage of unqualified documents, misleading statements and threats, and your usage of unpaid forced labor for handling a debt validation case that the Department of Education should handle with its own labor resources.

Please note that this is an open letter that I will publish on the Internet, on StopExtortion.org so that it is accessible to the general public and to other institutions.

Enclosed is the latest invoice. As long as you continue to make unvalidated monetary demands, you will continue to receive invoices and debt validation requests like the ones listed below.

In your correspondence you have stated that the Department of Education holds legally binding promissory notes and other records supporting the existence of debt. However, you have not validated this statement and your right to make monetary demands.

Further, you have not provided copies of the original Application and Promissory Note financial aid application documents, even though your providing copies of the original documents is important to moving this case forward. Similarly, you have not explained why you do not provide copies of the original documents which, according to your previous statements, are in the possession of the Department of Education.

Without receiving copies of the original documents that legitimately support the existence of debt, I cannot determine how much money I owe to the Department of Education, or if I owe the Department of Education any money at all.

You are responsible for validating your monetary demands, and you have not done so. Because you claim that the Department of Education holds legally binding promissory notes, as I have stated before (citing),

  • as assignees, the Guaranty Agencies and other secondary holders step into the shoes of the lender from whom they have taken the promissory notes and are subject to any defenses that the student/obligee may assert against the assignor/lender. See Jackson v. Culinary School of Washington, 788 F. Supp. 1233, 1248 n.9 (D.D.C. 1992), reversed on other grounds, 27 F.2d 573 (D.C. Cir. 1994), vacated, 515 U.S. 1139, on reconsideration, 59 F.3d 354 (D.C. Cir. 1995).
  • For full text see http://scholar.google.com/scholar_case?case=17364705146781432529

At this point in time the following holds true:

  • Because you insist that a breach of contract has occurred, you must show that an unambiguous and valid contract was in place to begin with, that contained all the necessary basic components of contracts: an offer, an acceptance, and consideration. You have not done so. This burden of proof is clearly on you.
  • A legally enforceable contract must be consummated by consideration which, in this case, would be my receiving student loans as the promisor from Fleet National Bank as the promisee.
  • You have not validated that I received either directly or indirectly, as tuition support, student loans from Fleet National Bank.
  • The requirement of consideration often protects the promisor from being liable for granting gratuitous promises. The same principle applies here as well. Without receiving bank loans, mere signing of boilerplate financial aid applications does not constitute borrowing money and does not create a legally enforceable contract, whether or not the financial aid application includes a section that is labeled Promissory Note.
  • Further, you have not shown that I ever signed any legally binding promissory note debt instruments while a student at Rhode Island College.
  • The partial copies of Application and Promissory Note financial aid applications that you sent me do not meet the requirements set for the legally binding promissory note debt instruments, as defined in Article 3 of the Uniform Commercial Code.
  • Instead of providing copies of legally binding original promissory note debt instruments, you have provided partial copies of Application and Promissory Note financial aid applications. Financial aid applications and legally binding promissory notes are different documents and are subject to different rules and requirements, even if parts of the two different documents are on the same sheet of paper.
  • On the Application and Promissory Note financial aid applications that I filled in and signed, there is only one space where I as a financial aid applicant could have signed the document. That space is right below the Promissory Note area of the financial aid application. When I filled in the financial aid applications between 1990 and 1996, I signed the Application and Promissory Note financial aid applications in that space provided.
  • As a result of my submitting Application and Promissory Note applications I received financial aid, such as work-study, Rhode Island College Honors Scholarship, and Pell Grant. You have failed to demonstrate that my filling in and signing the Application and Promissory Note financial aid applications also led to my receiving student loans from Fleet National Bank.
  • As far as I know, as a student I did not qualify for bank loans because I was in the U.S. on a temporary visa when I first attended college, and then on Green Card until graduation, without any credit history, co-signer or collateral in the U.S. Further, initially I did not have any U.S. work experience and work history either.
  • While I was a student my income was extremely low and did not support borrowing from a bank the $46,354.00 that you allege I borrowed as principal, to which you later added interest and fees, so that at this point you are demanding from me over $135,000.00 as unvalidated debt.
  • Further, you allege that I borrowed $46,354.00 in federally guaranteed loans, in order to attend state owned Rhode Island College as state resident, while the in-state cost of tuition between 1990-1996 ranged from $1,703 to $2,838 a year. You make these allegations and demands without validating their accuracy.
  • Further, the partial copies of the Application and Promissory Note financial aid applications that you sent me were made from copies. If I actually received bank loans as a student, and the Department of Education now owns that debt, then the Department of Education should have in its possession the original legally binding promissory note documents that were obtained through legal means, that is, were legitimately signed over by the original lender.
  • Accordingly, the Department of Education not having in its possession the original legally binding promissory note documents, that were actually signed over to the guaranty agency, is another indicator that I did not receive student loans from Fleet National Bank.
  • You have not provided copies of the original Notice of Loan Guarantee and Disclosure Statements covering the amount of debt you allege that I borrowed. Instead, you sent me Notice of Loan Guarantee and Disclosure Statements that were generated in 2012 by entering my current information into a computer system. As you know, I graduated from college in 1996. You sent these documents to me in 2012, in an attempt to support your monetary demands. I caught your “mistake” because a wrong bank’s name was used on these fraudulently generated documents.
  • You allege that Rhode Island Higher Education Assistance Authority guaranty agency paid insurance claims on my behalf to Fleet National Bank in 1997, and that this demonstrates both that I did receive student loans and that the Department of Education now owns the resulting debt. However, you have failed to provide proof that Fleet National Bank actually submitted insurance claims to the guaranty agency for my alleged debt, and that the guaranty agency actually made payments to Fleet National Bank for my alleged debt. Instead, you provided copies of guaranty agency internal worksheets that any guaranty agency employee could have filled in without receiving insurance claims from Fleet National Bank, and without making insurance payments to Fleet National Bank.
  • On the copies of the Application and Promissory Note financial aid applications that you sent me, there are broken, shadowy rectangles around the Promissory Note portions of the applications. These irregularities and possible alterations call into question the documents authenticity. Your providing duplex copies of the original documents, instead of sending me copies made from copies, would help to address this issue.
  • Similarly, your providing duplex copies of the original documents, instead of sending me copies made from copies, would help to determine, whether or not Fleet National Bank actually did sign over the alleged loans to Rhode Island Higher Education Assistance Authority guaranty agency, which then signed the alleged loans over to the Department of Education. If there weren’t any loans, there was nothing for Fleet National Bank to sign over.
  • The Application and Promissory Note financial aid applications are duplex (two-sided) documents. You have provided separate copies of font ends, and back ends, of the Application and Promissory Note financial aid applications. There is no identifying information whatsoever that links these separate copies together.
  • The back ends of the documents that you sent me carry AFSA Data Corporation’s stamp, and have Fleet Nat’l Bk hand written on them.
  • Because the separate front end and back end copies do not contain any identifying information that links these copies together as one document, people who handle these copies can create new documents by putting together and sending out copies of different people’s applications, as if these were one person’s documents. People who handle these copies can do so either accidentally or purposefully.
  • You can take a copy of one person’s financial aid application front end who did not receive student loans, and another person’s financial aid application back end who did receive student loans, put them together, and insist that the newly created copies of documents provide “evidence” that (1) the first person received student loans as well, and (2) that the Department of Education now owns the alleged student loans.
  • Perhaps this sounds far-fetched.
  • Similarly, it seems unlikely, that the U.S. Department of Education would participate in sending out in the debt validation process Notice of Loan Guarantee and Disclosure Statements that were generated by entering information into a computer system over 15 years after the student graduated from college, so that you could have documents that support your demands.
  • Yet, you did this.
  • Similarly, it seems implausible, that the U.S. Department of Education would imply that it has sent out copies of original legally binding promissory note debt instruments that it has in its possession, while actually sending out partial copies of financial aid applications and so, that the partial copies themselves were made from copies of questionable authenticity – and, without the U.S. Department of Education having any original documents at all.
  • Yet, you did this.
  • Thus, your providing duplex copies of the original documents would help to address the issues listed above.

Briefly, all your demands and claims are unsubstantiated. Accordingly, for the public record, we can state the following:

  • The U.S. Department of Education is known to make claims that it does not validate about holding documents and owning debt. Such claims may, or may not be true. Until proven otherwise, there is no reason to believe that these claims actually are true.

We are documenting this case and your relevant actions on the Internet. So, every other individual who wishes to do so can refer to your actions that have been documented on StopExtortion.org.

Mr. Duncan, the Department of Education insisted that I must sign a statement, declaring under penalty of perjury that the information that I have provided about this case is true to the best of my knowledge. I did sign such a statement. Now it is your turn.

Because of high importance of having clarity regarding the original documents, and because the U.S. Department of Education is known to make claims which may, or may not be true, about holding documents and owning debt, without validating the claims made, I request that you send me a notarized statement listed below:

  • “As a duly authorized representative of the U.S. Department of Education, I certify with my signature that(1), (2), (3), (4), (5) and (6) listed below are all completely accurate:
  • (1) the U.S. Department of Education is in the possession of Thomas Eklund’s, Social Security Number XXX-XX-XXX (“Thomas Eklund”), original two-sided (duplex) Application and Promissory Note documents for the full amount of student loans that has been demanded from Thomas Eklund as loan payment principal, and
  • (2) the U.S. Department of Education is in the possession of Thomas Eklund’s authentic original Notice of Loan Guarantee and Disclosure Statements for the full amount of student loans that has been demanded from Thomas Eklund as loan payment principal, and
  • (3) the U.S. Department of Education can validate that Thomas Eklund received student loans from 1990 to 1996 in the full amount that has been demanded from Thomas Eklund as loan payment principal, and
  • (4) the U.S. Department of Education can validate that these Application and Promissory Note documents that Thomas Eklund signed as Rhode Island College student are legally binding promissory note debt instruments that prove the existence of the full amount of debt that has been demanded from Thomas Eklund, and
  • (5) the U.S. Department of Education can validate that in 1997 Fleet National Bank submitted to Rhode Island Higher Education Assistance Authority insurance claims for Thomas Eklund’s student loan debt for the full amount that has been demanded from Thomas Eklund as loan payment principal, and that in 1997 Rhode Island Higher Education Assistance Authority paid to Fleet National Bank insurance claims for Thomas Eklund’s student loan debt for the full amount that has been demanded from Thomas Eklund as loan payment principal, and
  • (6) the U.S. Department of Education can validate that in 1997 Fleet National Bank signed over to Rhode Island Higher Education Assistance Authority Thomas Eklund’s student loan debt for the full amount that has been demanded from Thomas Eklund as loan payment principal, and that the U.S. Department of Education is at this point the legal owner of Thomas Eklund’s student loan debt for the full amount that has been demanded from Thomas Eklund as loan payment principal.
  • I declare under penalty of perjury under the laws of the United States of America that the foregoing in true and correct, and that I am the person named above, and I understand that any falsification of this statement is punishable under the provisions of 18 U.S.C. Section 1001 by a fine of not more than $10,000 or by imprisonment of not more than five years or both, and that requesting or obtaining any record(s) under false pretenses is punishable under the provisions of 5 U.S.C. 552a(i)(3) by a fine of not more than $5,000.”

This statement must be signed by an authorized U.S. Department of Education representative. The signature must be accompanied with the authorized representative’s printed name, position, company or organization’s name where the person currently works, and the signed person’s contact information.

If the Department of Education does hold original legally binding documents and can actually validate its demands, you shouldn’t have any problem having this statement signed and notarized.

If you do provide the statement requested above, declaring under penalty of perjury both that (1) the alleged debt exists and (2) that the Department of Education does hold the original documents, and (3) that the Department of Education is the actual legal owner of the debt that you demand from me, we can move this case forward toward finding a solution.

If, instead, you once again fail to validate your demands, this case will remain spinning in the same place, unresolved, as it has been for close to two years now. On StopExtortion.org we will continue to document this Department of Education managed ineffective and wasteful way or resolving problems. The characteristics of this case are indicative of the overall student loan debt management by the Department of Education. These records will remain publicly accessible for decades to come, as part of your legacy.

Further, please note, that because we are documenting this case and your relevant actions on the Internet, from now on, going forward, every other individual who wishes to do so, can refer to your actions that have been documented on StopExtortion.org, and can also make a request for a statement similar to the above.

By making me to sign a statement under the penalty of perjury, while knowing in advance that the relevant information will be published on the Internet, the Department of Education created a precedent that both myself and other people can use.

Now, and going forward, you and the rest of the Department of Education will have to live up to it. Every time when any Department of Education employee or representative declines to sign a statement under penalty of perjury regarding the validity of the claims made, the Department of Education is actually issuing a statement, indicating that the Department of Education has something to hide.

People deserve to know the truth. In my case, the truth is that you have failed to validate that (1) I received any student loans and that any debt actually exists, and (2) that the Department of Education holds valid legally binding promissory note debt instruments, and (3) that the Department of Education is the legal owner of the alleged debt.

I know about this because I challenged your version of the debt that I allegedly owe. If I would have believed you, you would have rendered me into financial servitude for an unknown period of time.

How many other such cases are there, where people believe that the monetary demands that the Department of Education makes are both legitimate and accurate, but in reality your demands are primarily based on the abuse of the extraordinary debt collection powers granted to the Department of Education?

Thomas Eklund

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