Every year, the CFPB hears from thousands of student loan consumers who report a range of problems with their student loan servicers. Student loan servicers are the companies to which you submit your student loan payments each month. Many of you report a range of servicing problems that can be caused by incomplete, inaccurate, or untimely information about so-called “enrollment status.”
Your enrollment status records the dates you have been enrolled in college, including whether you are currently enrolled and your expected graduation date. This information can have a significant impact on your life. For example, this information may be important when you need to pass a background check to find a job.
For millions of student loan borrowers, this information can also help determine when to start repaying student loans and decide how to calculate student loan interest costs and when any unpaid interest can be transferred to principal.
Inadequate information about a borrower’s enrollment status can have serious financial consequences. It can cost some borrowers hundreds of dollars in additional interest and lead to unexpected loan bills and ineligibility for other student loan benefits.
That’s why we’ve released this new consumer advisory to warn you about red flags and take action when problems arise. We’ve also released a new report in which we take a closer look at problems borrowers are seeing where servicers are using incomplete, inaccurate or untimely information about their enrollment status.
Misinformation About Your College Admissions Status Could Cost You
As student borrowers pursue a degree, leave school, or enroll, they report a host of problems every step of the way caused by misinformation about their enrollment status. The CFPB received the following:
- Unexpected student loan bills for full-time students. Student loan borrowers have filed complaints with the Consumer Financial Protection Bureau (CFPB) alleging they are paying undue payments, poor credit reports due to “late” payments on their student loans, and increased fees when any unpaid interest may be transferred to principal. These borrowers are in trouble because their student loans unexpectedly went into repayment, even though they were enrolled full-time and had no payments due.
- Borrowers may receive unexpected loan bills after leaving school. After correcting an erroneous enrollment date, a borrower’s loan account can be reinstated. For example, one borrower described how after his servicer automatically updated the incorrect information about his date of leaving school, the servicer sent him a new reinstated past-due bill to cover several months of missed payments that was hundreds of dollars more than he was initially told.
- Difficulties in obtaining deferrals while in school have resulted in borrowers facing long periods of high loan payments after returning to school. Returning borrowers can often defer payments on existing loans while they are re-enrolled at least half-time. The Bureau has heard from returning borrowers that it can take months for their servicer’s systems to accurately reflect their changed enrollment status, and that they are required to continue making payments during this time despite being eligible for a deferral while in school. Some borrowers report that they were unable to afford their payments for years after returning to school. Other borrowers report that failure to properly apply for in-school deferrals resulted in unexpected late fees and damaged credit. One private student borrower told us:
“[My lender]…claimed they had no record of my enrollment (no other lender had this issue)…I shouldn’t have been charged the past two years. As a student on a tight budget, I had to take out additional loans to make the monthly payments, and when I called and reached someone last year, they told me there was nothing I could do that year except wait for [a third-party enrollment reporting company] to update my information for the second year. That never happened, and they still billed me at the start of my third year.”
- Barriers to Correcting or Updating Borrowers’ Incorrect Enrollment Status Information. Borrowers complained that they were unable to resolve errors related to their enrollment status. These borrowers described a series of unsuccessful encounters with a variety of individuals, including staff at their colleges, customer service representatives at their colleges’ enrollment reporting companies, and customer service personnel at their student loan servicers. In some cases, the Bureau heard that borrowers lost eligibility for benefits or protections related to their enrollment status despite having proof of enrollment. Other borrowers also reported that even after they corrected enrollment status errors with their servicers, they were frequently placed back in the incorrect enrollment status.
Three tips to help you spot mistakes that could leave you with hundreds of dollars in extra student loan debt
With these challenges in mind, the CFPB has some suggestions to help you avoid them when repaying your student loans.
1. It is important to keep track of your enrolment status, especially if you have recently left school or are returning to school.
- When you leave school, it’s important to know when your first payment is due. Your servicer will use your expected completion date to determine the start date for your student loan payments. Colleges report graduation dates differently, and this date may be earlier or later than you expect. If you’ve exhausted your grace period or your student loans don’t have a grace period — meaning you have to start or resume payments immediately after leaving school — it’s especially important to know when your first payment is due to avoid surprise bills.
- If you are leaving college early or returning to school, let your loan servicer know. It may take some time for your loan servicer to get updated information from your school about your enrollment status, which can cause delays when you want to manage your loan payments. Proactively notifying your loan servicer can help you avoid making or paying monthly payments that you may not be able to afford. Be especially careful if you leave school before your expected graduation date or return to school after you have already started paying off your loans.
2. When you find any abnormality, please inform your service provider to repair it.
If information is sent through several different data systems, your enrollment status may be incorrect. Work with your student loan servicer to correct any incorrect information. Explain to them what you think is wrong and why. Here are two steps you can take to quickly fix enrollment status errors yourself:
- Verify your enrollment with your student loan servicer. Your servicer may be using outdated or inaccurate information to administer your loans. You can submit updated documentation from your college to your servicer to confirm your enrollment.
- To get the most up-to-date information, check your school’s enrollment status. Contact your school’s registrar’s office to make sure your enrollment status is reported correctly. Your school may have a process in place to provide documentation proving your enrollment. If you recently transferred or returned to school, you can also update your information on the Department of Education’s National Student Loan Data System student website.
3. If you encounter a problem, please file a complaint.
If you cannot get accurate or timely information from your carrier about your enrollment status, you can file a complaint online or call the CFPB at (855) 411-2372. If you would like more information about your student loan repayment options, you can also review the CFPB’s tool “Repaying Student Debt” to help you understand your loan repayment options.
Seth Frotman is the CFPB’s Student Loan Ombudsman. To learn more about our work on behalf of students and young consumers, visit consumerfinance.gov/students .
