Student borrowers hit with credit score penalty

HOUSTON – About one in eight people in the United States have student loan debt.

Payments for around 80% of these borrowers have been deferred or postponed until May 1, 2022, but one man says his loan officer flagged his account as delinquent, causing his rating to drop sharply credit. He called KPRC 2 Investigates for help.

At the start of the pandemic, the way some loan servicing companies reported deferred payments had a negative impact on borrowers’ credit scores. These problems have since been corrected, but Austin O’Neal still cannot get Nelnet loans to fix his credit report.

O’Neal earned a studio art degree from the University of Houston in 2013. Every month for about seven years, Austin and his parents sent a payment to loan company Nelnet. When President Trump announced in March 2020 that payments for all federally-backed student loans would be deferred under the CARES Act, the O’Neals stopped paying. Austin’s father, Eddie, said their Nelnet account confirmed they owed nothing.

A d

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

But in November, Austin received an alert about 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 flagged his loan as delinquent, which dropped his score to 632.

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

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

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

Nelnet’s Director of Communications sent KPRC 2 this statement:

A d

“Thank you for reaching out and giving Nelnet the opportunity to respond. As 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 please be aware that we have also contacted the borrower directly to see if any assistance can be provided.

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

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

A d

If you are having this same or similar problem and your loan officer is not 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 backed by the federal Department of Education, there’s an easy way to check.

Log on to 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 U.S. Department of Education. Repayments of these loans are deferred until May 1, 2022.

If you have a federally guaranteed loan, you may be able to have your loan waived or waived if you work in the public service, are a teacher, or are disabled.

A d

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

If you need help with the loan officer for your federal loan, you can contact the FSA Ombudsman here.

Copyright 2022 by KPRC Click2Houston – All Rights Reserved.