Somerset mayor's unpaid student loan damaged credit of family members

Mayor says family drama led to years of non-payment

By Dillon Collier - Investigative Reporter

SOMERSET, Texas - The mayor of Somerset has apologized but has not indicated whether she intends to pay off a 14-year-old student loan, after a KSAT 12 Defenders investigation revealed the loan nearly doubled in size due to non-payment, damaging the credit of the mayor's aunt and uncle, who co-signed on it.

The $5,544 student loan, which originated in August 2003, was intended to help Mayor Lydia P. Hernandez cover expenses for her freshman year at Schreiner University, in Kerrville, according to promissory note records obtained by The Defenders.

The mayor's aunt and uncle, Sandra and Philip Padilla, agreed to co-sign on the loan, records showed.

The university's office of the registrar confirmed Hernandez left the school after two semesters without obtaining a degree.

The loan, however, continued to accrue interest and grew as high as $9,778.73 by the summer of 2014.

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"We thought it would be a good thing for her. We had no thought of this ever happening," said Philip Padilla. "We were under the assumption everything was good."

The couple said they first learned the loan was defaulted and had damaged their credit in 2013 when they attempted to refinance their home.

They are currently making monthly loan payments of more than $70 and said the loan will cost them more than $11,000 if they are forced to pay off the remaining balance of nearly $8,300.

The couple said the money spent on the loan is money that otherwise would have gone into a college savings account for their teenage daughter.

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Additionally, since they are not the primary loan holders, the Padillas are not permitted to write off the interest on the student loan when paying taxes.

Hernandez, at first, told her aunt and uncle she would take care of the loan but then stopped responding to her aunt's text messages, according to phone records provided to The Defenders.

The Padillas then received a cease and desist letter signed by Hernandez, accusing them of stalking and using threats to collect on the debt.

"Be the woman she's supposed to be, the person she's supposed to be and have the character she's supposed to have as mayor to make her payments," said Philip Padilla. "She knows that she's taking away from her goddaughter's education every month and she does not care."

"I apologize for that, and I'll take care of that in a personal way," said Hernandez during a brief interview last month before a City Council meeting.

When first asked if she intended to pay off her student loan, Hernandez said, "Sure," but then said an ongoing family dispute was her reason for continuing to knowingly not pay it.

"Really, truly, I would love to talk to you about this later, and I definitely could answer a lot of questions for you," said Hernandez, who has been the city's mayor since 2016.

The Defenders have not heard from her since.

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Although required by state law to post its current budget online, Somerset's most recent budget posting was for fiscal year 2015.

Those records show the city had a general fund budget of more than $836,000.

Hernandez, who said she does not earn a salary as mayor of Somerset, does make $12.39 an hour as a special education aide and cheerleading sponsor for Somerset High School.

"I'm pretty sure I can come up with the funds. It's not that," said Hernandez, when asked if she had the finances to cover the monthly payment.

Records showed Hernandez made a $40.08 payment in July 2015.

Her aunt and uncle then received a notice from Navient, the company holding Hernandez's loan, that the bank account had been closed out before a second payment could be withdrawn. 

A spokesperson for Navient explained in a written statement why co-signers are responsible for making sure the loan gets paid off:

Generally speaking, in the case of any co-signed consumer loan and as noted in the promissory note, both the primary borrower and cosigner are equally liable for the loan.  If a payment is missed we reach out to both customers to ensure they are aware of the delinquency and to discuss options to help them avoid a negative report to a consumer rating agency.  Remember the loan was originally approved--often at a lower interest rate--because the primary borrower and cosigner both pledged to be responsible for the loan.  We encourage the primary borrower and cosigner to work together and also to reach out to us to discuss their circumstances and options.


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