A transfer of student loan accounts from Nelnet to Mohela in 2023 resulted in millions of credit reporting inaccuracies, according to lawmakers. Duplicate records and incorrect credit scores impacted borrowers for up to a year and a half.
A faulty transfer of student loan accounts from Nelnet to Mohela in 2023 led to millions of consumer credit reporting errors, lawmakers say in a new letter to government agencies reviewed by CNBC. The change in loan servicers caused nearly 2 million duplicate student loan records to appear on borrowers’ credit reports, while hundreds of thousands of borrowers’ credit scores were reported incorrectly for up to a year and a half, according to the letter. Sen. Elizabeth Warren, D-Mass.
, Ron Wyden, D-Oregon, and other lawmakers sent the letter on Wednesday evening to Consumer Financial Protection Bureau Director Rohit Chopra and U.S. Department of Education Secretary Miguel Cardona. As part of their investigation, the lawmakers sent inquiries to Nelnet, Mohela and three credit reporting companies: Equifax, Experian and Transunion. They asked the companies about what had gone wrong and how many borrowers were impacted. In their letter, the lawmakers urged the government agencies to investigate the problems. “We respectfully request that the CFPB and ED use their supervisory and enforcement authority to ensure that the appropriate parties are held accountable for these errors,” the lawmakers wrote. Mohela appears to have failed to inform the credit reporting companies of each loan transfer from Nelnet, the lawmakers said they found in their investigation. As a result, many borrowers had their single loan balance reported twice, once by each servicer. Duplicate student loan balances on a borrowers’ credit report can reduce their credit scores and make it more difficult for them to obtain mortgages, car loans and other credit, the lawmakers note in the letter. Nelnet spokesperson Ben Kiser said the issues “arose out of an ED-directed change in servicing requirements,” which “are entirely outside servicers’ control.” Mohela did not immediately respond to a request for commen
STUDENT LOANS CREDIT REPORTING MOHELA NELNET CONSUMER FINANCE
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