Now a story you’ll see on just one station: Hank’s uncovered a surprising glitch in the federal student loan billing system that’s causing the credit scores of some students to sink! How can it happen? Could you be affected? Hank Investigates.
Graduation day. The pomp, the pride–and of course, the diploma! But what millions of college grads also get is a big fat student loan debt. This recent graduate, we'll call him Joe–is embarrassed to show his face because he got way behind on paying his loan back. Way behind.
“Joe” College Graduate: “You feel kind of helpless.”
But then Joe got a great job in a fancy office and signed up for Uncle Sam’s student loan rehabilitation program. All he had to do to get out of default was make 9 payments in a row–and the US Department of Education promised to actually erase the black mark from his credit history. And he did it!
“Joe” College Graduate: “I mean, that was the way to go!”
And that's when it all went bad.
Hank: “ Are you in better shape when you started, or worse?”
“Joe” College Graduate: “Worse! Actually much worse!”
We have learned the U.S. Department of Education has a mess on its hands, a software glitch–that's what they're calling it–is failing to update thousands of properly paid student loans—-making them look like they're still in default!
Hank: “So the US Department of Education is ruining your credit!”
“Joe” College Graduate: “Right now, yes.”
He found out when he tried to buy a house–the realtor told him his credit score stunk.
Hank: “Could you buy a house?”
“Joe” College Graduate: “Nope.”
Hank: “Could you get a loan?”
“Joe” College Graduate: “Nope.”
Hank: “Could you get a credit card?”
“Joe” College Graduate: “Nope.”
Hank: “What do you think about that?”
“Joe” College Graduate: “It’s horrible.”
Student advocates tell us they've gotten an alarming number of complaints about this–
Persis Yu, National Consumer Law Center: "Oh borrowers are furious when they find out!"
Some say they're having their wages garnished, their tax refunds taken–even though they've made all the payments to get their loans out of default!
Hank: “These people did the right thing”
Persis Yu, National Consumer Law Center: “Absolutely.”
Hank: “These people paid what they were supposed to pay.”
Persis Yu, National Consumer Law Center: “Yes.”
Hank: “And yet Uncle Sam broke the promise.”
Persis Yu, National Consumer Law Center: “That appears to be what's happening!”
The Feds aren't saying much about this…in fact, they wouldn't talk about it on camera at all.
They would only tell us "We are still working through the delay but could begin processing rehab loans soon. We are still testing the system."
Now borrowers like Joe–who have their financial futures on hold—are giving Uncle Sam a failing grade.
“Joe” College Graduate: “It’s terrible, it really is.”
If you're in this situation, two things–First, don't stop making your payments! That'll put you in even more of a mess.
You can also contact the US Department of Education Ombudsman’s office for help: http://www.ombudsman.ed.gov/resolve.html
And for additional information check out The National Consumer Loan Center's Student Loan Borrower Assistance Project: http://www.studentloanborrowerassistance.org/
(Copyright (c) 2012 Sunbeam Television Corp. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)