Student loan borrowers hit with credit score penalty

HOUSTON – Approximately one in eight Americans is in debt on a student loan.

Payments for about 80% of these borrowers have been postponed or postponed until May 1, 2022, but one man says his credit servicer reported his account expired, causing a sharp drop in his credit score. He called KPRC 2 Investigates for help.

At the start of the pandemic, the way some credit services companies reported deferred payments had a negative impact on borrowers’ creditworthiness. These issues have since been fixed, but Austin O’Neal still can’t get Nelnet credits to fix his credit report.

O’Neal graduated from the University of Houston with a degree in studio art in 2013. Austin and his parents have been making a monthly payment to the Nelnet financial institution for about seven years. When President Trump announced in March 2020 that payments on all government-sponsored student loans would be postponed under the CARES Act, the O’Neals suspended payments. Austin’s father Eddie said their Nelnet account confirmed they owe nothing.

display

“It says the current amount due – $ 0,” the elder O’Neal showed us on his son’s Nelnet account.

But in November Austin received a warning about its excellent credit score of 781.

“Suddenly 150 points fell in one minute,” he explained. “That’s when I knew something was wrong.”

Austin said Nelnet reported his loan sinner, which caused his score to crash to 632.

“It means a lot to me when I have to find a new apartment or a new townhouse to accommodate something,” explains the 33-year-old. “When I have to refinance my vehicle, new employers also check the creditworthiness and it is very important to me to keep an eye on my creditworthiness.”

When the O’Neals called Nelnet, a representative told them that Austin’s student loan was private, not a federal loan, and therefore could not be deferred. Nelnet wouldn’t tell them or us why Austin’s account was not showing an amount due each month when he actually owed money.

“I don’t ask for anything special. I just want it removed from my story, ”Austin explained.

display

Nelnet’s communications director sent KPRC 2 this statement:

“Thank you for reaching out and giving Nelnet the opportunity to respond. Since the security and privacy of customer information is a top priority for Nelnet, we cannot discuss details of customers and / or their accounts. However, please note that we have also reached out to the borrower directly to see if there is any way to help them.

For more than 40 years, Nelnet has focused on living our core value of delivering great customer experiences. Given the complexity of student loans, any interaction with borrowers is an opportunity to ensure that they are receiving the reliable and effective service they deserve in managing their loans.

We also understand the unique challenges the pandemic has posed for so many, and we have friendly, skilled staff ready and willing to assist borrowers with any questions or concerns they may have regarding their credit.

display

If you are experiencing this or a similar problem and your credit service provider is not working with you, file a complaint with the Consumer Financial Protection Bureau here. The lender has to answer your complaint.

Like Austin, if you’re not sure whether your student loan is government sponsored, there is an easy way to check.

Log in to studentaid.gov. Click View Details, then search for “Loan Breakdown” on the grant summary page to see a list of your federal student loans. If the servicer name begins with “Dept. of Ed ”, your loan is owned by the US Department of Education. Payments for these loans will be deferred until May 1, 2022.

If you have a government supported loan, if you work in the public sector, are a teacher, or have a disability, you may be able to waive or dismiss your loan.

display

Click here for instructions on how to apply for relief if you fall into any of these categories.

If you need help with the loan service of your federal loan, you can contact the FSA ombudsman here.

Copyright 2022 by KPRC Click2Houston – All rights reserved.

.

Leave a Comment

Your email address will not be published. Required fields are marked *