If you have student loans, you probably know the good news: most federal loans are automatically in abstention until the fall. This means borrowers don’t have to pay, but student loan managers still mark loans as paid on time. It’s a free six-month pass.
Except that there is one small problem: getting the correct information about the period of suspension of payments to the credit bureaus. Because if we’ve learned anything this spring, it’s that implementing mass adjustments because of the coronavirus takes time and doesn’t always go smoothly.
That’s why student loan borrowers flocked to Reddit over the weekend after noticing their credit scores had dropped by 50 points. The only reason most reviewers were able to determine is that their federal student loans had been updated on their credit report to indicate that the loans were deferred or forborne.
The CARES Act clearly states that eligible federal loans must be reported as current and in repayment. So what gives?
Fortunately, we now know that there is no sinister plot to ruin your credit during the pandemic. It’s a programming problem. The word comes from Betsy Mayotte, the founder of the association The Institute of Student Loan Counselors (TISLA).
According to Mayotte, who is active on Reddit, this is the first time that student loan service systems have needed to indicate a large-scale payment waiver. “So far there has been no abstention or adjournment that should be flagged as anything other than abstention or adjournment,” she wrote in r / student loans. “The maintenance systems had to be reprogrammed to report these waivers as refunds and receipt of payments, even though they are in fact in a forbearance. “
In addition to this, Federal Student Loans Services send reports to the credit bureaus on the 10th of each month; while they were able to indicate waivers on borrower reports, they were unable to correct part of the reporting process to show that all accounts are in good standing.
If your score has fluctuated, Mayotte predicts that it will take a few weeks for your credit report to accurately reflect the waiver program and for your score to stabilize. For now, you shouldn’t need to dispute the problem with every credit bureau. But watch your reports closely over the next few weeks in case the problem persists.
Remember, you can get free weekly access to your credit report from each credit bureau until April 2021 by visiting annualcreditreport.com. While you can check your credit through a variety of other free sources, the ability to check your report with each office directly as often as once a week (rather than once a year per office) can be of benefit. great help to track your finances right now. .