The original lender turned the defaulted loan over to a private collection agency. The collection agency then began the process to garnish my wages. As proceedure they offered me the chance to request a hearing to contest the amount owed, show financial hardship, and stop the pending garnishment. I collected all the neccessary paperwork, copies of check stubs, bills, tax-returns, etc., filled out the forms and mailed it all to the collection agency.
For more than a month I waited for something to happen. They did not respond at all. One day a woman from the agency calls me to say that they had reviewed all my documents and could clearly see that I was unable to make any good payments on this loan. She stated that they had decided to turn this matter over to the government. I ask her about the garnishment hearing and she stated that they had decided against pursuing this.

This was the last I heard from them. Sometime later I received an envelope, from the collectors, filled with copies of various documents pertaining to my account. Not understanding much of what it contained I put it away for safe keeping. A few months later a letter arrived welcoming me to the "William D. Ford Student Loan Repayment Program". My old defaulted loan had been started all over from the beginning as if I had just borrowed it. I had no clue how or why this had happened.
The Ford loan again went into collections. The DOE has hired another private agency to collect this loan. The new agency threatened to garnish my wages and take my tax returns, etc. Once again I was offered the chance to have a review where I could challenge the amount owed. I felt I should dispute the 500% increase in the priciple loan amount.

The decision letter I received from the DOE stated that in 2004 I had signed for a Federal Direct Consolidation Loan. Details of my obligation to pay this were stated in my promissory note that I had signed, they said.
I had never signed anything. I had not even fill out any applications.
Upon careful checking of all my saved documents, and the DOE website, it is now clear that the original collection agency applied for and was granted a full consolidation loan in my name in order to pay off the defaulted amount. The DOE's website allows borrowers to get consolidation with only an electronic signature in the form of a PIN. This pin is apparently given to the applicant who must promise never to share it.

That package of papers I received from the original collectors included a stamped "copy" of the promissory note I was supposed to have filled out and signed with my "PIN". I never had a PIN from the DOE. Nor did I fill out any request for further consolidation. But, according to the DOE I did all this back in 2004, and now owe more than 72K which they will now offset through the Dept. of Treasury. The collectors committed fraud in my name. Since the DOE website relies on PIN signatures I have no idea how to prove that this was all done by someone other than me.
So, I am wondering if this has ever happened to anyone else? Have you had a collection agency use the fraud-friendly DOE borrower's site at: www.loanconsolidation.ed.gov to pay themselves off at a handsome profit?
This certainly happened to me.