The Consumer Financial Protection Bureau on Monday issued a warning to consumers to pay close attention to their personal information on record with student loan servicers as errors are popping up that can cost borrowers dearly.
About 44 million Americans have student loan debt totaling $1.3 billion.
The watchdog agency said it gets thousands of complaints each year from consumers about issues with student loan servicers, which are the companies they submit payments to each month. But they are increasingly hearing about problems tied to incorrect or incomplete enrollment status information.
Enrollment status tracks whether someone is enrolled in college or university and their expected graduation date. It helps determine when someone must begin repaying their student loans and how interest is calculated. But the CFPB says bad information is costing some borrowers hundreds in additional interest charges, leading to unexpected bills, hurt credit reports and lost eligibility for other benefits.
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Students typically are not required to make payments on student loans while they are in school and get a grace period after graduation before repayment is due. But errors in the reporting system — sometimes triggered by a student leaving school temporarily, reducing the number of hours or transferring schools — can create a headache.
Borrowers reported loans going into repayment status before they graduated or interest being accrued too early because of these errors. Others suffered due to a lag time in reporting, which put them behind on payments before they even knew they were due. And borrowers also complain they are unable to get the errors resolved easily.
The CFPB points no fingers in its report but several in the student loan world say it’s due to a byzantine system of reporting.
Colleges and universities are required to provide timely, accurate and complete…