A student loan problem on a credit report rarely announces itself. It shows up as a mortgage rate that came back higher than quoted, a denial letter, or a credit score that dropped eighty points in a month — and when the borrower finally pulls the report, the student loan tradeline is the reason. We see these errors constantly in our practice, and most of them follow a handful of patterns.
The errors we see over and over
Late payments reported for months you were in deferment or forbearance. A borrower who was approved for a pause owes no payment, and a payment that was not owed cannot be late. When the servicer’s records and the bureaus’ records disagree about the pause, the report shows a string of delinquencies that never happened.
The same loan reported twice after a servicing transfer. Federal loans move between servicing companies — the Department of Education’s own site explains that loans are transferred from one servicer to another. When the old servicer’s tradeline is not closed out correctly, the borrower carries two open accounts for one debt, doubling the reported balance.
A default that outlived its cure. A borrower who rehabilitates or consolidates a defaulted federal loan is supposed to see the reporting change to match. When the default status keeps reporting after the cure, the single worst mark a student loan can leave stays on the file without a basis.
A paid or discharged loan still reporting a balance. Paid-in-full loans reporting as open, and loans discharged for disability reporting as due, both appear regularly.
Wrong dates that keep a delinquency alive too long. The Fair Credit Reporting Act limits how long most negative information may appear. An error in the date a delinquency started quietly extends that clock.
Someone else’s loan on your file. Similar names, family members who co-signed, and plain data mismatches put other people’s student debt onto the wrong report.
Why student loans produce so many of these
Three features of student lending make it error-prone in a way a car loan is not. A single borrower often has many loans — one for each disbursement — so one mistake can repeat across half a dozen tradelines at once. The loans change hands: servicing transfers move millions of accounts between companies, and every transfer is a chance for histories to garble. And the last few years added a federal payment pause and a restart of collections; our note on the government’s resumed collection efforts explains why delinquency reporting returned at scale.
Who is legally responsible
Two kinds of company answer for a student loan error under the Fair Credit Reporting Act. The servicer that reports the account — the furnisher — must report accurately and must investigate when a dispute is forwarded to it. The credit bureaus must conduct a reasonable investigation of your dispute, generally within thirty days, and correct or delete what cannot be verified. When either one rubber-stamps a wrong tradeline instead of investigating, the Act gives you a claim.
How to dispute a student loan error
Dispute in writing with each bureau showing the error, and send the dispute to the servicer as well. Say specifically what is wrong — “this account was in an approved forbearance from March through August and no payment was due” beats “this is inaccurate.” Attach what you have: the forbearance approval, the payoff letter, the rehabilitation completion notice. Keep a copy of everything and proof of mailing. Pull all three bureau reports rather than one — a loan reported correctly at one bureau and wrongly at two is itself evidence.
If the dispute comes back “verified” and the error remains, that is not the end. It is usually where the legal claim begins.
What a claim is worth
Damages in these cases can include the concrete losses — the higher rate, the lost mortgage, the denied refinance — along with the harm to your credit and, where the violation was willful, statutory and punitive damages. The fee provision is written into the Act: in a successful action the costs and reasonable attorney’s fees are recoverable from the defendant, as determined by the court. That is why this work is handled on a contingency basis rather than billed by the hour.
You pay nothing unless we win.
Where your situation fits
Our directory of student loan servicers explains who reports your loans and links to a page on each company: Nelnet, Aidvantage, MOHELA, Navient, Sallie Mae and SoFi. If a dispute has already failed, our FCRA lawsuit page sets out what comes next, and our credit report errors lawyer page describes how we handle these cases.
Have your report reviewed
The Kim Law Firm represents borrowers in Fair Credit Reporting Act cases against student loan servicers and the credit bureaus. Send us the report and whatever paperwork you have — the forbearance approval, the payoff letter, the denial — and we will tell you whether we see a claim.
Contact us to have your credit report reviewed.
Admitted in Pennsylvania and New Jersey; available to appear pro hac vice in other federal courts.