In addition, the company said her first loan originated in 2002, not 1997, and they had no record of her previous 5 years of payments.
“It sounds like there was a mistake somewhere along the line,†says Mark Kantrowitz founder of FinAid. “Maybe one of the former lenders passed on erroneous information, data could have been corrupted, or there could even be someone else out there with her name,†he adds.
With her original lender out of business, Butler was told by her lender that her only recourse was to come up with statements or payment records dating back to 1997.  Unfortunately, due to upheaval from a divorce and other life events, she didn’t have the paperwork. She also had her monthly payments automatically withdrawn from her checking account, consequently, there were no cancelled checks. To make matters even more worse, the credit union she used for her banking does not keep records dating that far back.
“For that burden to be placed entirely on her is nonsense,†says Greg McBride, chief financial analyst at Bankrate.com. “Mortgages get sold all the time. You don’t have to go back and prove you’ve made house payments,†he added.
The Burden of Proof
While there is no question that borrowers should keep copies of all of documents associated with their  student loans and loan payments, attorney Robyn Smith of the National Consumer Law Center says in cases like Butler’s, the lender must prove they own the loan and that the borrower agreed to the terms.
“Anybody can hold a copy of a document and say ‘You owe me money,’†Smith says. “If they claim to own the loan, they have to show a chain of title. They should be able to produce the promissory note — the contract that outlines the terms and conditions of the loan. The lender needs to prove they own the loan and that the borrower agreed to the terms and interest rate. There is always a paper trail.â€
In the interim, Smith says Butler should seek out legal counsel and decide carefully if she will continue making payments. “If she stops making payments, it could negatively affect her credit history. This could be reversed if she were successful in court, but it’s a decision that should be weighed heavily,†adds Smith.
Butler approached me with her story at Black Enterprise’s Women of Power Summit last week in Fort Lauderdale, Fla. We will keep you posted as her story unfolds and share what she learns. In the interim, Butler and the other Americans who collectively owe more than a trillion dollars in student loan debt anxiously await Washington’s execution of a Student Bill of Rights that can keep stories like Butler’s from happening in the first place.