In a new blog post, the CFPB provides credit reporting advice to service-disabled veterans who take advantage of federal student loan forgiveness available from the Department of Education for veterans who receive a 100 percent disability rating from the Department of Veterans Affairs. The CFPB encourages veterans who use this benefit to confirm that their student loan servicer is providing correct information about their loan discharge to credit bureaus. The blog post appears to have been triggered by complaints or reports of alleged credit reporting errors the CFPB has received from service-disabled veterans.
While framed as advice for veterans, the blog post also appears intended to serve as a warning to servicers. Without providing any information as to the nature of the alleged errors, the CFPB stresses how such errors can negatively impact veterans. It cites the complaint of a veteran whose credit score allegedly “fell by 150 points as a result of this type of error” and, as an “example of what could happen if a veteran tried to buy a home after a credit reporting error caused similar damage to her credit profile and score,” indicates such veteran could pay $45,000 in additional interest over the life of her mortgage loan. The CFPB also reminds servicers that, in a bulletin issued earlier this year, companies who furnish information to credit bureaus were put “on notice” of their obligation to investigate disputed information. The CFPB comments that it “will take appropriate action, as needed” and “will also continue to closely monitor complaints from veterans and other disabled student loan borrowers to make sure student loan servicers are furnishing correct information to the credit bureaus about disability discharges.”
Given the comments made by the CFPB in its blog post, we’re left wondering if the loans in question weren’t simply reported in accordance with the current contractually required standards for reporting discharged Title IV loans, and, if so, if the CFPB isn’t really taking issue with those standards. In circumstances like this, it would be helpful if the CFPB would discuss its concerns with industry members, perhaps involve the Department of Education in those discussions, and then provide industry members with an opportunity to make changes in their reporting, rather than just asserting that the reporting is incorrect or inaccurate.