For many aspiring homeowners, a good credit score is a key to unlocking the door to their dream home. However, a recent glitch in the student loan system has put a damper on this journey for some, including Alexandra Pimentel, who found her student loan balance erroneously doubled on her credit report.
The shocking discovery
While on the path to homeownership, Pimentel was stunned to discover that her credit report listed her student loan amount as $90,000 instead of the actual $45,000. This duplication occurred after transferring her loan from Nelnet to the Missouri Higher Education Loan Authority (MOHELA). A quick online search revealed that this was not an isolated incident; numerous borrowers were facing similar issues.
The widespread issue
An investigation by The Washington Post uncovered that approximately 1.4 million student loan records had been duplicated on credit reports. This has led to a drop in credit scores for many borrowers, most of whom are unaware of the duplication. The glitch is believed to be a result of changes in the management of the government’s $1.6 trillion education loan portfolio that began in 2021.
The fight for resolution
Pimentel, determined to correct her credit report, filed disputes with Experian and complaints against MOHELA, Nelnet, and the credit reporting agency with the Consumer Financial Protection Bureau. Despite her efforts, the error persisted, leaving her and many others in a state of financial uncertainty.
Corrective measures underway
In response to the outcry, the student aid office has requested Experian to review accounts transferred between Nelnet and MOHELA. Experian is now expanding its review to include all student loan servicers to address the 1.4 million duplicate records.
The situation serves as a stark reminder of the importance of regularly checking credit reports and being proactive in disputing inaccuracies. It also highlights the need for transparency and efficiency in the management of student loans to prevent such errors from undermining the financial stability of borrowers.
