Continued Suspension of NSLDS Access Affects Loan Services

USA Funds^®advises its customers that the continued suspension of guarantor, lender and servicer access to the National Student Loan Data System is affecting education-loan services. The U.S. Department of Education suspended access to NSLDS information for all users except students, borrowers and postsecondary institutions as part of an effort to identify unauthorized use of the database.

“NSLDS data is used by guarantors for a wide range of purposes, from ensuring the eligibility of student-loan borrowers to preventing fraud and abuse in the student-loan program,” said Rick Buckingham, USA Funds vice president, policy and compliance.

Among the guarantor activities affected by the suspension of NSLDS access are the following items:

Student and Borrower Impacts

• Loan-guarantee processing may be delayed due to the inability to effectively research, resolve and quickly correct application issues pertaining to eligibility, including resolving conflicts regarding enrollment information, aggregate borrowing and confirming resolution of previous loan defaults.
• Borrowers may not be effectively helped with questions about loan repurchases, loan forgiveness, loan-holder contact information, among other issues.
• Information provided through Borrower Debt Management Information correspondence will not provide students with a complete picture of their outstanding indebtedness.

School Impacts

• Schools will experience an increase in direct communications from their guarantors related to enrollment discrepancies.
• A school’s ability to timely and effectively process student aid will be hampered by the inability of guarantors to use NSLDS for data-discrepancy resolution.

Lender Impacts

• Claim-return and rejection rates may increase due to the inability to access NSLDS data to resolve enrollment, interest-rate and insurance-rate discrepancies.

Other Impacts

• Efforts to detect and prevent fraud, abuse and ineligible borrowing will be hampered because access to data provided by other guarantors on NSLDS is not available.
• Conflicts with NSLDS data provided by other guarantors will not be resolved because USA Funds will not be able to identify which organization supplied the conflicting data.

In an April 27 update, the Department of Education advised that it is making several changes in login procedures to ensure that NSLDS data and queries are accessed only by authorized users for authorized purposes. ED advised that the reinstatement of NSLDS access for each organization will be delayed until the organization has complied with conditions to be described in a separate communication to each entity.

“We support the department’s efforts to prevent unauthorized use of NSLDS data, and we hope that our access to this vital information is restored in the very near future,” Buckingham said.