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Student loan borrowers hit with credit score penalty

Student loan borrowers hit with credit score penalty
Written by Publishing Team

Houston About one in eight people in the United States has student loan debt.

Payments to about 80% of those borrowers have been deferred or deferred until May 1, 2022, but one man said his loan manager reported a delay in his account, causing a significant drop in his credit score. Contact KPRC 2 Investigates for assistance.

At the start of the pandemic, the way some loan service companies reported deferred payments negatively affected a borrower’s credit scores. These issues have since been corrected, but Austin O’Neill still couldn’t get Nelnet loans to correct his credit report.

O’Neill earned a degree in studio art from the University of Houston in 2013. Every month for about seven years Austin and his parents sent a payment to the loan service company Nelnet. When President Trump announced in March 2020 that payments for all federally backed student loans under the CARES Act would be deferred, O’Neills stopped making payments. Austin’s father, Eddie, said his Nelnet account confirmed that they don’t owe anything.

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The elder O’Neill showed us his son’s Nelnet account: “It says the current amount owed – $0.”

But in November, Austin received an alert about his excellent credit score of 781.

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

Austin said Nilent reported being behind on the loan, crashing his balance to 632.

“It means a lot when I need to look for a new apartment or a new home in town, or the home of anything,” the 33-year-old explained. “If I need to refinance my car, even new employers will check my credit history and it is very important for me to stay on top of my credit score.”

When O’Neills contacted Nelnet, a representative told them that the Austin student loan is a private, not a federal loan, and therefore does not qualify for a deferment. Nelnet won’t tell them or tell us why Austin’s account showed zero due each month, if in fact he owed money.

“I’m not asking for anything special. I just want to remove it from my history,” Austin explained.

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The Director of Communications at Nelnet KPRC 2 sent this statement:

“Thank you for reaching out to us and giving Nelnet a chance to respond. As the security and privacy of customer information is a top priority for Nelnet, we are unable to discuss any details regarding customers and/or their accounts. However, please note that we have also reached out to the Borrower directly to see if There was an opportunity to help him.

For over 40 years, Nelnet’s focus has been on living by our core value of providing superior customer experiences. With the complexity of student loans, every interaction with borrowers is an opportunity to ensure that they receive the reliable and effective service they deserve while managing their loans.

We also understand the unique challenges that the pandemic has brought to many, and we have partners who are friendly, qualified, willing and willing to assist borrowers with any questions or concerns they may have about their loan(s). “

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If you encounter this same or a similar problem, and your loan provider isn’t working with you, file a complaint with the Consumer Financial Protection Bureau here. The lender will have to respond to your complaint.

If, like Austin, you’re not sure if your student loan is federally backed by the Department of Education, there’s an easy way to check.

Log in to studentaid.gov. Click View Details, then search for Loan Details on the Aid Summary page to see a list of your federal student loans. If the service name begins with “Dept. of Ed,” your loan is owned by the US Department of Education. The repayment of these loans has been deferred until May 1, 2022.

If you have a federally backed loan, you may be able to forgive your loan or have your loan forgiven if you work in the public service, are a teacher, or have a disability.

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

If you need loan service assistance for your federal loan, you can contact the FSA Ombudsman here.

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