May 14, 2008

Sallie Mae Borrowers Snagged by Error in Reports to Credit Bureaus

Washington — As many as one million customers of Sallie Mae, the nation’s largest student-loan company, may be facing problems with their credit ratings after a computer error that the company has worked to fix.

Sallie Mae says it mistakenly reported to credit bureaus that thousands of its customers were delinquent in paying back their loans. That caused their credit scores to drop by 100 points or more, Bankrate.com reported today.

Sallie Mae says the error occurred last Thursday, when it reported extended repayment plans as meaning the borrower was making a partial payment. That report led Equifax, one of the three national credit-reporting agencies, to code the accounts as delinquent, Sallie Mae spokesmen said.

A Sallie Mae spokesman said the error had affected less than 10 percent of its 10 million borrowers. All affected credit reports were corrected by late Tuesday, and Sallie Mae will take corrective steps, including supplying a credit-reference letter to anyone who needs help in proving the source of the mistake. —Paul Basken

Comments

1. This is criminal. If this happened to me, and Sallie Mae destroyed my credit rating, I would be looking for more than a letter.

   — C    May 15, 07:15 AM    #

2. This is a grossly unjust error. A letter may help a little, but it would be best for the executive administration to respond appropriately to have affected records corrected. The derogatory comment should be removed from an individual’s credit report — entirely.

   — JN    May 15, 07:35 AM    #

3. And FFELP advocates say the Federal government is incapable of operating a loan program? Wouldn’t this be an example of what they fear might happen?

   — DS    May 15, 09:23 AM    #

4. I agree with JN. However, it has been my own experience with Sallie Mae that they do not go far enough to correct their own errors and it costs customers. My school loans were through SM and had adjustable rates. At one point my monthly payments dropped somewhat significantly when they readjusted the rate. Not being a banker or accountant myself, I simply trusted their math as I always had and paid what they requested each month. Over a year later I received a letter stating that my payment was immediately being drastically increased and that I had two options: pay an amount that was very difficult to meet monthly or have my payment period extended. They deducted a small amount of the interest that should have been paid when they were under billing me. However, they would do nothing about the excess interest I was paying overall (I chose not to extend payment in an attempt to mitigatge the excess interest). It was frustrating—although not nearly as frustrating as correcting a credit report. And, although I had the benefit of paying less for approximately eighteen months, the fact is that I relied on them to actually be able to do math and it cost me extra money in interest in the end (and, from a practical standpoint, it is only a benefit to pay less if you know you will being paying significantly more later and can plan appropriately). SM’s history of negligence simply continues—and now it is affecting credit ratings. Fixing credit mistakes is time-consuming and often an uphill battle. Good luck to those affected.

   — EAC    May 15, 11:42 AM    #

5. Sallie Mae took a loan that had 3.5 years left and without telling me reset it to 10 years left. I am still fighting with them over this 2 years later.

   — annon    May 23, 04:49 PM    #

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