How the Equifax Data Breach Could Affect Your Student Loans

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In September, Equifax announced that it had been hacked. The company, one of the three major credit reporting bureaus, said that hackers could have the personal information of nearly 145.5 million Americans. That means criminals could have access to sensitive data, including credit card information and Social Security numbers.

Immediately after Equifax went public with this information, consumer watchdog groups and financial experts encouraged consumers to put a credit freeze on their accounts to protect their credit. However, putting a freeze on your account after the Equifax data breach can have unintended consequences, especially if you’re applying for student loans.

The Equifax data breach

From May through July 2017, cyber-criminals hacked into Equifax’s system, accessing the names, Social Security numbers, birthdates, and driver’s licenses of millions of people. They were also able to extract the credit card numbers belonging to over 200,000 people.

Despite the fact that executives knew about the Equifax data breach as early as July, they didn’t go public with the information until September. That delay could have worsened the situation for some individuals.

Protecting your information

Equifax is offering a year’s membership to TrustedID Premier, an identity protection service, free of charge to those affected by the data breach. The Federal Trade Commision (FTC) and other organizations, however, say signing up for identity protection isn’t enough.

With your name, birthdate, and Social Security number, thieves can use your information to open new credit cards or take out loans in your name. Their actions can destroy your credit report and credit score, and recovering from identity theft can take months or even years.

To prevent that from happening, the FTC recommends placing a credit freeze on your report at all three credit bureaus. With a credit freeze, the credit bureaus lock your account so lenders cannot access your information. As long as a credit freeze is in place, you cannot open new credit cards or take out a loan — and neither can identify thieves.

How an Equifax credit freeze affects student loans

While a credit freeze offers some protection, it can have unexpected consequences when it comes to applying for student loans.

Although most federal student loans are not dependent on a borrower’s credit history, some student loans do require a credit check. But with a credit freeze in place, lenders will be unable to verify your credit and will not approve you for a loan.

A credit freeze could impact your eligibility for the following types of student loans:

  • Grad PLUS loans: Grad PLUS loans are federal loans for graduate and professional students enrolled in school. Students cannot have an adverse credit history and must go through credit counseling to qualify for a loan.
  • Parent PLUS loans: Parent PLUS loans are federal loans parents can use to pay for their child’s undergraduate education. Like Grad PLUS loans, parents cannot have an adverse credit history or they might need an endorser to sign the loan with them. For Parent PLUS loans, only the parent’s credit information is considered, not the student’s.
  • Private student loans: Private lenders — such as banks or individual companies — provide loans to students. Typically, students use private student loans to pay for college when they have exhausted other options. The lender checks the applicant’s credit history before approving the loan.

If you placed a credit freeze on your account after the Equifax data breach, lenders will not be able to access your credit report. Even if you have a fantastic credit history, lenders won’t approve your application and you could be left scrambling to find other forms of financial aid.

What to do if you’re applying for student loans

The Equifax data breach is scary, and taking action is a smart idea. However, if you need to submit your FAFSA and apply for a loan, you should wait until your loan is approved to put a credit freeze in place.

If you’re in need of financial aid and have already placed a credit freeze on your account, you won’t be able to receive some student loans while the freeze is in place. Instead, you’ll have to contact the credit bureaus and ask them to remove the freeze.

It’s a good idea to remove the freeze before you plan on applying for a loan. You should keep your account open until you receive a notification from the lender that says they’ve approved you for your loan.

You can remove a credit freeze by following the instructions provided by each credit reporting agency. If you choose to contact the agency through the mail, be sure to include your full name, address, Social Security number, PIN number, a copy of your driver’s license, and a copy of an utility bill or bank statement along with your request.

Equifax

Experian

TransUnion

Once you receive a loan approval from your lender, you can contact the three credit bureaus to reinstate the credit freeze.

Moving forward

The Equifax data breach scared a lot of people, and many took immediate action without thinking about the potential consequences. If you need to apply for PLUS loans or private loans, take action now to ensure lenders can access your credit report.

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Here are our top student loan lenders of 2019!
LenderVariable APREligibility 
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

(1)All rates shown include the auto-pay discount.  The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 9/3/2019. Variable interest rates may increase after consummation.


2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Important Disclosures for Discover.

Discover Disclosures

  1. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Auto Reward Debit Reward Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.
  3. Aggregate loan limits apply.
  4. Lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest interest rate offered on the Discover Undergraduate Loan and highest interest rates offered on Discover student loans, including Undergraduate, Graduate, Health Professions, Law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable Margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 2.50% as of July 1, 2019. Discover Student Loans will adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Please visit discover.com/student-loans/interest-rates for more information about interest rates.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

4 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).

  1.  Rates are as of July 1, 2019 and include auto-pay discount. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment. Variable rates may increase after consummation.

5 Important Disclosures for Citizens.

Citizens Disclosures

Undergraduate Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of October 1, 2019, the one-month LIBOR rate is 2.05%. Variable interest rates range from 3.15% – 11.41% (3.15% – 11.26% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.

Citizens Bank Student Loan Eligibility: Borrowers must be enrolled at least half-time in a degree-granting program at an eligible institution. Borrowers must be a U.S. citizen or permanent resident or an international borrower/eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For borrowers who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank- participating school. 

Please Note: International Students are not eligible for the multi-year approval feature.

3.70%
11.98%
1
Undergraduate, Graduate, and Parents

Visit College Ave

3.25% – 10.65%*,2Undergraduate and Graduate

Visit SallieMae

3.37%
11.87%
3
Undergraduate and Graduate

Visit Discover

3.52% – 9.50%4Undergraduate and Graduate

Visit CommonBond

3.15% – 11.41%5Undergraduate and Graduate

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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