Guaranteed Student Loans:

Credit Bureau Reporting Practices by Guaranty Agencies and Lenders

HRD-90-71BR: Published: Apr 9, 1990. Publicly Released: Apr 9, 1990.

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Pursuant to a congressional request, GAO reviewed the implementation of the Higher Education Amendments of 1986, focusing on: (1) guaranty agencies' and lenders' actions; and (2) the provisions' effect on individuals' repayment of student loans.

GAO found that: (1) all guaranty agencies had agreements with or reported student loan delinquencies to at least one of the six national credit bureaus, but only three agencies entered into agreements with all six; (2) all lenders reported to at least one credit bureau; (3) guaranty agencies and lenders believed that such reporting reduced the number of loan defaults; (4) most agencies were unable to judge the provisions' impact on borrowers; (5) most lenders believed that the provisions hindered delinquent borrowers and helped borrowers who made timely payments; (6) most guaranty agencies and lenders opposed a proposed provision requiring the deletion of bad credit ratings if borrowers subsequently repaid their loans; (7) most guaranty agencies and half of the lenders believed that they should be allowed to delete bad credit ratings; (8) guaranty agencies would like report to fewer national credit bureaus; (9) most agencies reported to bureaus and updated records at least monthly; (10) most agencies believed that credit bureau reporting had some effect on improving their postdefault collections; (11) all the lenders reported all new borrowers and updated records monthly; and (12) most lenders updated records to show delinquencies within 90 days.

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