U.S. Senators Take Aim At Student Loan Servicer

A group of U.S. Senators is demanding that the U.S. Education Department take action against Great Lakes, a company that services student loan debt.

Six U.S Senators; Elizabeth Warren (MA), Jeff Merkley (OR), Richard Durbin (IL), Sherrod Brown (OH) Richard Blumenthal (CT) and Tina Smith (MN) … all Democrats …sent a letter to Education Secretary Betsy DeVos after learning that Great Lakes inaccurately reported payment information on millions of student loans, hurting the credit scores of the borrowers.

Yahoo News reports that the Senators said in the letter that the Education Department needs to immediately address the issue, and that the company must be held responsible. “This error likely caused significant financial harm to millions of federal student loan borrowers, including lowered credit scores and resulting harm, such as denial or increased cost of credit and other significant financial harm,” they stated in the letter. “We demand the Department take immediate action to fully remedy this issue, hold Great Lakes accountable for this inexcusable blunder, and provide Congress with a detailed accounting of how this breakdown occurred.”

The letter follows the filing of a class action suit against Great Lakes, Equifax TransUnion, Experian and other various agencies owned by VantageScores Solutions. The class action suit was filed in the U.S. District Court’s Northern District of California.

Under the CARES Act, student loan payments on principal and interest were supposed to be suspended, and the accounts were to be reported as up to date. But Great Lakes sent information to the credit bureaus saying that the borrowers had deferred their payments, which lowered their credit scores. Nearly 5 million borrowers were affected.

Politico reports that the company blamed the mistake on a “coding error”.

Both the company and the Education Department have said that the problem is being addressed.

Additional information.

(Image courtesy Alpha Stock Images)

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