Errors related to borrowers’ college “enrollment status” can have serious financial consequences, and the U.S. Consumer Financial Protection Bureau is making current and former students aware.
Your enrollment status is a record of the dates you have been attending classes in college, including whether you are currently enrolled and your expected graduation date.
If there is a mistake regarding this status, “It can cost some borrowers hundreds in additional interest charges, and lead to unexpected loan bills and lost eligibility for other student loan benefits,” writes Seth Frotman in a blog post for the CFPB.
The agency has published a new report focusing on borrower issues when a student loan servicer uses incomplete, inaccurate, or untimely information about a borrower’s enrollment status.
Here are the top issues, according to the CFPB.
Unexpected student loan bills for borrowers enrolled in school full time. These borrowers ran into trouble when their student loans unexpectedly entered repayment status, even though they were enrolled in school full time and no payments should have been due. The result: costly payments borrowers should not have had to make, negative credit reporting from “delinquent” student loan payments, and increased costs when any unpaid interest can turn into principal.
Surprise delinquencies or unexpected loan bills for borrowers leaving school. After inaccurate enrollment dates are corrected, loan bills can be back-created for borrowers. For example, one borrower described how, after his servicer automatically updated inaccurate information about the date he left school, his servicer sent him a new back-created, past-due bill for several months of missed payments, billing him for hundreds of dollars more than what he was originally told.
Difficulty accessing deferments while still in school, leading to extended periods of costly payments for borrowers returning to school. Borrowers returning to school can often defer payments on their existing loans when they re-enroll at least half-time. The Bureau heard from borrowers returning to school that it can take months for servicers’ systems to accurately reflect their changed enrollment status, requiring them to continue making payments during this period despite being eligible for in-school deferment.