Senators claim 'faulty' student loan transfer led to 'millions of consumer credit reporting errors'

A coalition of Democratic senators on Wednesday night sent a letter to federal agencies about an investigation that found that a "faulty" transfer of student loan accounts in 2023 resulted in “millions of consumer credit reporting errors." 

The error occurred when the student loan provider NelNet transferred student loan accounts to MOHELA last year. The change resulted in nearly 2 million duplicate student loan records appearing on borrowers’ credit reports, and negatively impacted hundreds of thousands of borrowers’ credit scores, which were incorrectly reported for up to a year and a half, per CNBC. 

The senators, led by Massachusetts Sen. Elizabeth Warren, notified the Consumer Financial Protection Bureau (CFPB) and Department of Education (DOE) of the findings in a letter, which claimed the problem appeared to stem from MOHELA's failure to notify several credit reporting agencies ahead of the transfer.

The senators urged the federal government to hold NelNet, MOHELA, and the credit reporting companies accountable for the errors and claimed those in fault do not plan to compensate impacted borrowers, or have taken responsibility for the errors so far.

“We respectfully request that the CFPB and [DOE] use their supervisory and enforcement authority to ensure that the appropriate parties are held accountable for these errors,” the lawmakers wrote. 

The senators also urged the departments to conduct a wider investigation into duplicate student loan reporting errors because their investigation was confined to NelNet and MOHELA. 

The letter was also signed by Sens. Ron Wyden and Jeff Merkley of Oregon, and Richard Blumenthal of Connecticut.

NelNet told CNBC that the errors come from "an ED-directed change in servicing requirements [that] are entirely outside servicers’ control," and the credit reporting agencies said the errors have been fixed. 

“We are working with the Department of Education and the servicers to correct misreported accounts and ensure that student loans are being appropriately reflected on consumer credit reports," an Equifax spokesperson said.

Misty Severi is an evening news reporter for Just The News. You can follow her on X for more coverage.