Why Are Late Payments Showing on Student Loans That Are in Forbearance?

Many borrowers are surprised — and frustrated — to see late payments appear on their credit reports even though their student loans are supposed to be in forbearance. If this has happened to you, you are not alone. There are several common reasons this can occur.

First, forbearance may have been approved but not applied correctly. Some borrowers have multiple loans, and not all loans are placed into forbearance at the same time. If even one loan is missed, it can trigger a late-payment notice. Typically, each semester you attended school, a new loan was taken out to cover tuition. If you did not consolidate those loans into one single loan, this may have happened to you.

Second, some borrowers have both federal and private student loans. Federal loans follow Department of Education rules, while private lenders set their own policies. A private loan may still require payments even when federal loans are paused.

Third, loan servicer transitions have caused widespread reporting errors. For example, your Navient loan may have been transferred over to MOHELA. Over the past few years, millions of student loans were transferred to new servicers. During these transfers, forbearance information could have been lost or applied late, leading to inaccurate credit reporting.

Another common issue occurs when income-driven repayment paperwork is delayed or not processed on time. Even a short gap can cause a loan to briefly appear past due. The important thing to know is this: if your federal student loans were in an approved forbearance, late payments should not be reported to the credit bureaus.

If you notice this issue, start by checking your loan status at StudentAid.gov. Then contact your loan servicer and request a credit reporting correction. If the issue is not resolved, you may file a dispute with the credit bureaus or submit a complaint through StudentAid.gov or the Consumer Financial Protection Bureau.

If you need help understanding your options, the Greenville Financial Empowerment Center is here to help you take the next step toward protecting your financial future.