Some student loan servicers have been held legally liable for false/unsubstantiated credit report errors in student borrowers’ reports. Navient has recently been sued for, among other allegations, damaging the credit reports of students eligible for the Total and Permanent Disability (TPD) Discharge, which included military veterans. Between October 2012 and June 2014 (at least), Navient falsely reported many TPD borrowers’ student loans as in default rather than successfully discharged, which wrongfully harmed their credit scores and hindered their abilities to open credit cards and take out mortgages.
According to the Federal Trade Commission (FTC), “an estimated 40 million Americans have an inaccuracy on at least one of their reports.” These errors can have widespread effects on consumers and the economy itself, especially considering about 44 million Americans have student loan debt and many must work with companies like Navient and Sallie Mae. Errors and inaccuracies can lower borrowers’ credit scores, causing them to be charged higher interest rates or even turned down for credit, and can also result in paying higher insurance rates and hundreds or thousands more in interest on mortgages and credit cards.
If you have student loans, it’s important to obtain a free copy of your credit report annually, and more times if necessary, to check for any errors, mistakes, or inaccuracies and report them to your loan servicer.