Why Are There So Many Student Loans On My Credit Reports?

graduation cap“John, I’m a recent college graduate and I’ve been in the work force for about 2 years now. Last week I pulled my credit reports and I have six, yes SIX, student loans on my credit report. I went to one school and graduated in a little over 4 years with one degree. I don’t have six loans.  How can I get this corrected?”

This is a very common question from new college grads who have taken out student loans to fund their educations. Student loans are reported as an installment loan on a credit report. An installment loan is for a specific amount with fixed payments over a fixed period of time. Other examples of installment loans are auto loans and mortgages.  These loans have less of an impact on your credit scores than credit card debt.

Every time you are billed for tuition, you will have a different student loan, even if you are using the same lender. You take out a new loan each semester and each is reported as a separate account with a different account number.  If your school is on semesters you will have two loans per year.  If you are on different terms or you go to summer school, you will have three to four student loans per year.  After four years you could have eight to twelve student loans, which are all listed individually on your credit report.  They’re reported on a disbursement by disbursement basis.

Student loans are deferred or postponed until after you leave college. The grace period or the amount of time you have to begin paying off the loans after you leave college ranges from 6 to 9 months depending upon the loan.

After graduating from college, student loans may be the only accounts on many students’ credit reports or at least represent the majority of accounts on their credit report.   Therefore, it is very important to pay student loans on time and to comply with the loan terms. Student loans should not be taken likely. Student loan debt cannot be included in bankruptcy and is not forgiven.  You must pay your student loan.  If you can’t pay the loans, contact the lender to try to make arrangements.

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JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  You can follow John on Twitter here.