The Third Circuit has recently held that universities are not exempt under the Higher Education Act ("HEA") from their duties as furnishers with respect to federal student loans. In Seamans v. Temple University, a borrower sued on a loan from 1992 alleging that the university's failure to report the borrower's initial default in 1992 and that it had been placed for collection violated its obligations under the FCRA to report fully and accurately the collection history and date of delinquency of HEA loans. Seamans disputed his credit history on the student loan to TransUnion when he saw the credit line. In response to Seamans' dispute, Temple failed to report to its loan servicer, ACS Education Services, Inc., the initial default date, that the loan had been placed for collection and that the borrower had disputed the information in the credit file which caused the Court to call into question the "reasonableness" of Temple's investigative and correction procedures. The HEA prohibits consumer reporting agencies ("CRAs") from "aging off" student loan information under the FCRA. Temple's position was that the FCRA prohibited it from reporting the first delinquency and collection history on HEA loans to CRAs. The Court determined, however, that the FCRA exemption did not apply to furnishers under the FCRA. The Court's opinion was a reversal of the opinion of the District Court in which it agreed with Temple that it was exempt from the FCRA with respect to education loans made pursuant to the HEA. The Court held that HEA did not materially impact Temple's obligations as a furnisher under FCRA and remanded the case to the District Court.
This article is presented for informational purposes only and is not intended to constitute legal advice.