July 25, 2021

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

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

A new report shows your credit score may have been damaged from your student loans.

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

Student Loans

Multiple student loan servicers — the companies that manage your student loan payments — allegedly made major errors during the Covid-19 pandemic, which may have directly hurt your credit score. Those are the allegations inside a shocking report, which describes wide-scale errors involving your student loans that were larger than previously known. The report makes several alleged claims, including:

1. Student loan payments weren’t reported correctly

The Cares Act, the $2.2 trillion stimulus package, allowed student loan borrowers to pause their student loan payments during the Covid-19 pandemic. However, the report details tens of thousands of new instances in which student loan servicers didn’t report the correct student loan repayment status to credit reporting agencies. Simply put, even though you weren’t required to make a student loan payment, your student loan servicer may have told credit reporting agencies that you were delinquent on your student loan payments. The report notes that if true, this misreporting would violate student loan borrowers’ rights under the Cares Act as well as federal state and federal consumer protection law, including the Fair Credit Reporting Act. For example, according to a lawsuit last May, Great Lakes, one of the leading student loan servicers, incorrectly reported to credit reporting agencies that nearly 5 million borrowers had stopped paying their student loans. As a result, these student loan borrowers may have had their credit scores damaged, which could have made hurt them financially during the Covid-19 pandemic.

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