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Emergency relief screw-up hits 5 million student loan borrowers

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  • Emergency relief screw-up hits 5 million student loan borrowers

    https://www.politico.com/news/2020/0...nt-loan-272334

    "Nearly 5 million student loan borrowers who got a break on their monthly payments from Congress under the economic rescue law have been hit with incorrect information on their credit reports that lowered credit scores in some cases, POLITICO has confirmed.

    The Trump administration has been rushing to fix the errors made by a company the federal government hired to collect and manage student loans. Great Lakes Educational Loan Services provided incorrect information for approximately 4.8 million federal student loan borrowers to credit bureaus such as Equifax, Experian and TransUnion, Education Department officials said Wednesday.

    Credit reports are used by everyone from lenders to landlords to employers to assess prospective customers, tenants or employees. The problem affected borrowers who owe federal student loans and who were automatically granted a six-month pause on their payments under the CARES Act, H.R. 748 (116).

    Congress anticipated that deferring those payments might blemish a borrower's credit report. The errors on borrowers' credit reports come as credit scores and history are especially important as Americans in financial distress seek access to credit. So Congress required the Education Department to make sure the deferred payments were reported to credit bureaus as on-time payments.

    But that didn’t happen for most federal student loan borrowers whose loans were managed by Great Lakes."

  • #2
    Ugh.. hadn't seen this. Thanks for sharing. I'm currently going through the mortgage process so that would be a big issue for me if it happened to me. Frankly, pretty much anyone on here shouldn't be with great lakes anyways except for a few residents. Should either have refinanced privately or be with FedLoans for PSLF/consolidated.

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    • #3
      Originally posted by East coast View Post
      Ugh.. hadn't seen this. Thanks for sharing. I'm currently going through the mortgage process so that would be a big issue for me if it happened to me. Frankly, pretty much anyone on here shouldn't be with great lakes anyways except for a few residents. Should either have refinanced privately or be with FedLoans for PSLF/consolidated.
      Huh, why ?you don’t have to be with a specific servicer for pslf or to consolidate .

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      • #4
        Yes you are kinda sorta correct, though also kinda sorta incorrect - I'm going to get into the weeds a bit here: ultimately, you do have to be with Fedloans for PSLF. Fedloans is the only servicer that can process your forgiveness. You don't have to be with them through the entire payment cycle, but for example if you were with Great Lakes all the way through your 120 payments, they will then tell you - "thanks for being our customer, now we move you over to Fedloans!!" and then you have to deal with the new servicer. feel free to google for horror stories of that transfer, though it could make your blood boil so you've been warned!! Every student loan adviser will recommend to just about anyone to be w Fedloans sooner rather than later if you are on an IDR.

        This is why the default option when you consolidate while on an IDR, is to get your loans transferred to Fedloans from another provider (Great Lakes, Navient etc). so even if you aren't going for PSLF, but have followed the 'typical' path of immediate consolidation, enter repaye so on and so forth, you should be (though to your point, you don't 100% have to be, yet) with FedLoans. I suspect if we did a poll of folks here - well over 75% of folks will be with Fedloans specifically for the above reasons, and thus my comment of 'pretty much anyone here shouldn't be with Great Lakes'.

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