Student Loans Report Claims Student Loan Servicers Failed You During Covid-19 Pandemic

Student Loans

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A new report shows that your student loans may have damaged your credit history.

Here’s what you need to know – and what it means for your student loans.

Student Loans

Several student loan service providers – the companies that manage your student loan payments – allegedly made serious mistakes during the Covid-19 pandemic that may have directly affected your creditworthiness. Those are the allegations in a shocking report that describes far-reaching errors in your student loans that were larger than previously known. The report makes several alleged allegations, including:

1. Student loan payments were not reported correctly

The Cares Act, the $ 2.2 trillion stimulus package, allowed student loan borrowers to suspend their student loan payments during the Covid-19 pandemic. However, the report describes tens of thousands of new cases where student loan service providers have failed to report the correct repayment status of the student loan to credit bureaus. Simply put, even though you didn’t have to make a student loan payment, your student loan service provider may have told the credit bureaus that you were behind on your student loan payments. The report finds that this hoax, if true, would violate the rights of student loan borrowers under the Cares Act and federal and state consumer laws, including the Fair Credit Reporting Act. For example, Great Lakes, a leading student loan provider, falsely reported to credit bureaus last May that nearly 5 million borrowers had stopped paying their student loans, according to a lawsuit last May. As a result, these student loan borrowers’ creditworthiness could have been damaged, which could have hurt them financially during the Covid-19 pandemic.

2. This student loan provider mistakenly said that 43,000 borrowers have stopped paying their student loans

Another student loan provider, ESCI, reportedly told credit bureaus that 43,000 student borrowers have stopped paying for student loans. Rather than characterizing these student loan borrowers simply as a temporary deferral of student loans under the Cares Act, ESCI allegedly labeled these student loans as deferred. According to the Student Borrower Protection Center, this could not only have damaged the creditworthiness of these borrowers, but it could also last through June 2020 after the U.S. Department of Education apparently said such errors stopped.

3. Student loan defaults were not properly reported

The Cares Act paused all federal debt collections for student loans for student borrowers whose student loans were in default during the Covid-19 pandemic. However, according to the report, student loan providers reported credit status for student loan takers differently. While some were correctly reporting the student loan status, the author of the report uncovered 5,290 cases where student loan borrowers were incorrectly reported as defaulted. Improper reporting could have harmed student loan borrowers, who were particularly financially vulnerable during the Covid-19 pandemic.

Student loan: next steps

The results of the report come at an inconvenient time for student loan borrowers, especially as many are questioning whether the student loan termination has been canceled. You should contact your student loan service provider to verify that your student loans and student loan payments have been reported correctly. Student loan borrowers will receive approximately $ 90 billion in student loans during the Covid-19 pandemic, but you should ensure that a mistake does not affect your creditworthiness. Separately, without extension, from October 1, 2021:

• Your state student loan payments will resume;
• Student loan interest will continue to apply to your federal student loan;
• For example, your wages, social security payments, or tax refunds can be seized to pay for defaulted student loans.

With reports of misconduct and other technical glitches, the report’s authors question whether student loan administrators will be able to manage student loan payments as of October. However, there is no indication that the student loan service providers failed to correct the errors that occurred during the Covid-19 pandemic. Expect student loan service providers to be the focus during Biden administration. Among other things, President Joe Biden, the US Department of Education and the Consumer Financial Protection Bureau will continue to work to ensure that consumers are protected, particularly with regard to their student loans. This is especially important as student loan payments will resume from October 1, 2021.

If you have student loans, make sure you have a student loan game plan ahead of time. Here are some smart options you can evaluate to save money and pay off student loans faster:

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source https://collegeeducationnewsllc.com/student-loans-report-claims-student-loan-servicers-failed-you-during-covid-19-pandemic/