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If you have federal student loans, help is on the way. But be patient: It could be a week or two before you see the changes applied to your account. Check your student loan account regularly, and pay attention to updates posted on your loan servicer’s website, as well as on the Federal Student Aid coronavirus information page. If you need to call your student loan servicer, expect to wait longer than usual to get through.
If you suspended your payments, check your credit reports
On May 20, Politico reported that federal student loan servicer Great Lakes Educational Loan Services provided incorrect information about nearly 5 million borrowers’ loan payments to the three main consumer credit bureaus, Equifax, Experian, and TransUnion.
Why this matters: As part of the CARES Act, if a student loan borrower chose to defer their monthly payments between April and the end of September, each suspended payment was to be reported to the bureaus as an on-time payment. However, due to a coding error, Great Lakes reported these payments as “deferred.” As a result, some borrowers found that the “deferred” payment status on their credit reports hurt their credit scores. And any negative information on your credit reports could potentially influence how lenders, landlords, and employers view you in the future.
Great Lakes said it’s working quickly to fix the problem. In the meantime, if your student loans are serviced by Great Lakes, you should check your credit reports. Here are some ways to do it for free:
- Through April 2021, you can view your credit reports from all three bureaus for free once a week at AnnualCreditReport.com.
- Credit Karma provides free credit reports from Equifax and TransUnion.
- Experian offers free access to your credit report once every 30 days.
If you find that your suspended loan payments were reported incorrectly as “deferred,” download a PDF of your credit reports for your records, then call Great Lakes and request that it changes your payment status with all three bureaus. (But be prepared to spend a lot of time on hold.)
How the stimulus package affects federal student loans
The $2 trillion stimulus package signed into law by President Donald Trump on March 27, 2020, provides some relief to federal student loan borrowers through September 30, 2020.
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act)—which will provide checks of up to $1,200 to many Americans, increased unemployment benefits, and forgivable loans for small businesses, among other relief measures—also expands on the president’s March 13 directive regarding waived interest on federal student loans.
The Department of Education will likely issue more guidance about what the CARES Act means for student loan borrowers, said Ben Miller, who previously worked in the department’s Office of Planning, Evaluation, and Policy Development, and is now vice president for Postsecondary Education at the Center for American Progress, an independent, nonpartisan policy institute based in Washington, DC.
“Congress wrote the bill quickly,” Miller said. “There’s only so much detail.”
Based on what we know now, here’s what the stimulus package means for people who have federal student loans—and what borrowers with private student loans can do.
Source: NY Times – Wirecutter
Keyword: Everything You Need to Know About Student Loan Relief During Coronavirus