Student loan borrowers hit with a credit penalty

HOUSTON – In the United States, about one in eight people have student loan debt.

Payments of around 80% of those borrowers have been deferred or postponed until May 1, 2022, but a man said his loan manager reported his account was in delinquency, causing his credit rating to drop sharply . He called KPRC 2 Investigates for help.

At the onset of the pandemic, the way some loan service companies reported deferred payments negatively impacted borrowers’ credit scores. These problems have since been corrected, but Austin O’Neal still cannot get Nelnet Loans to correct his credit report.

O’Neal graduated from the University of Houston with an art studio degree 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 on all federally backed student loans would be deferred under the CARES Act, the O’Neals stopped paying. Austin’s dad, Eddie, said their Nelnet account confirmed they didn’t owe anything.

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

But in November, Austin received an alert regarding his stellar credit score of 781.

“All of a sudden he lost 150 points in one minute,” he explained. “That’s when I knew something was wrong.”

Austin said Nelnet reported his overdue loan, which brought his score down to 632.

“It means a lot every time I need to go find a new apartment or a new townhouse, to house whatever,” said the 33-year-old. “If I have to refinance my vehicle, even new employers will check my credit history and it is very important for me to stay on top of my credit rating. “

When the O’Neals called Nelnet, a representative told them the Austin student loan was private, not a federal loan, and therefore not eligible for deferral.

“I’m not asking for anything special. I just want him removed from my story, ”Austin explained.

Nelnet’s communications director sent KPRC 2 this statement:

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“Thank you for contacting Nelnet and giving the opportunity to respond. Because the security and privacy of customer information is a top priority for Nelnet, we are unable to discuss specifics related to customers and / or their accounts. However, be aware that we also contacted the borrower directly to see if there was an opportunity to help.

For over 40 years, Nelnet has focused on implementing our core value of delivering a superior customer experience. With the complexity of student loans, every interaction with borrowers is an opportunity to ensure that they are receiving the reliable and efficient service they deserve in managing their loans.

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

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If you’re having this or a similar issue and your loan officer 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 are not sure if your student loan is guaranteed by the Department of Education, there is an easy way to check.

Log in to studentaid.gov. Click “view details,” then search for “loan breakdown” on the help summary page to see a list of your federal student loans. If the name of the repairer begins with “Dept. of Ed ”, your loan belongs to the US Department of Education. Payments on these loans are deferred until May 1, 2022.

If you have a federally guaranteed loan, you may be able to get your loan canceled or discharged 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 claim relief if you fall into any of these categories.

If you need help with the loan manager for your federal loan, you can contact the FSA’s mediator here.

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