2 Credit Issues That Federal Student Loan Debtors May Face

Thursday, Jul 29, 21

Important information to protect your credit score.

Consumers that owe federal student loan debts may soon face a higher risk of credit reporting damages and/or errors.  Learn the 2 credit issues that federal student loan debtors may face.  One potential credit reporting issue is related to Covid and one has nothing to do with Covid.

1.   For many consumers, federal student loan payments will soon be required again

Due to the Covid pandemic, the Federal Government passed the CARES Act, part of which was related to federal student loans.  As of March 2020, many federal student loans went into forbearance where no payments were required, and no interest was being charged.  Currently, the forbearance and zero interest policies are due to end on September 30, 2021.   I expect many consumers will face a higher risk of credit reporting issues due to the sheer number of loans going back into repayment at once along with all the potential special payment plans that are available on federal student loans.

2.   Two large student loan processors are calling it quits

Loan servicers, Granite State Management & Resources and The Pennsylvania Higher Education Assistance Authority (PHEAA), which operates as FedLoan Servicing for federal student loans, recently announced that they are getting out of the federal student loan servicing space.  Their servicing exit will lead to millions of consumers who are about to go back into repayment to have to worry about who their new loan servicer will be.  Many may be faced with questions like the who, how, how much and when do they have to pay.  Different loan servicers have different policies and procedures on how they accept payments.  These can include mailing monthly statements, auto debits, online payments, or other options.  In addition, different loan servicers have different policies and procedures on how and when consumers can seek other payment options as well as loan forgiveness.  Getting a new loan servicer combined with all the millions of loans coming out of forbearance just sounds like the perfect storm for credit errors.

Prepare now to avoid problems in the future

Know who your loan servicer is and how to contact them.  You can find your current federal student loan servicer at

If you have not been making student loan payments over the last year and a half or so, you may want to take a good look at your current budget.  Make the needed adjustments to your budget so that you can have the needed funds to resume your student loan payments.

Know your payment options.  Federal student loans have many special payment options for those who cannot afford the standard amortized payments.  You can find a Loan Simulator at or contact your servicer to determine your repayment options.

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Tips on how to protect your credit.

I suggest keeping all correspondence, mail, email, text and even phone records, related to your federal student loans.  Correspondence will confirm if you must make payments as well as the amount and due date of the required payments.  If you are going back to making payments, keep a detailed record of any payments made.  If you are setting up auto payments, confirm when the auto payment will start because in some cases, you may have to make a payment or two on your own until the auto payment is fully set up.  If you are going back into forbearance, keep details on when the forbearance will end.  If you get into an income-based program, keep details on when you must recertify your income.  By keeping all your correspondence and detailed records, it can help you fix a credit issue/error should one exist.

Consumers would be wise to review their credit reports regularly to ensure that there are no credit reporting errors related to their federal student loans that will be coming out of forbearance soon.  Consumers can access their credit reports for free at

How to increase your credit score.

If your credit needs some help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact a professional credit repair company like for help. By taking action to improve your credit, you may qualify for the home of your dreams or a new auto while paying less in interest charges.  Call us at 412-564-5370 with any questions / comments or schedule a free program review.  Like us on Facebook to receive future consumer credit tips.

About the Author

Credit Reporting / Scoring Expert, Chris McConville is the President of Credit Education at and founder of where he works as an Expert Credit Witness in both Federal and State Court. With working in the credit and mortgage fields since 1991, he’s dedicated to sharing his knowledge to educate consumers.

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