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The State University of New York has erroneously reported outdated student loan defaults to the major credit reporting agencies, putting an unwarranted black mark on the credit ratings of untold numbers of former students.

An error at SUNY's Student Loan Service Center in Rensselaer caused old information, some dating to the 1970s, to be reported as current.

State university officials said they do not know how many consumers were labeled as delinquent debtors after the seven-year limit on such disclosures had passed.

"Basically, what happened is the software the student loan center uses put a date in the wrong place," said SUNY spokesman Dave Henahan. He described the problem as confined to "a very small percentage" of its accounts.

However, the bad data emanating from the state office was widespread enough to earn a vote of no confidence from one of the big three credit agencies. Atlanta-based Equifax recently purged data from SUNY's loan office from all its files, representing more than 100,000 accounts, said Equifax spokesman Dave Mooney.

The decision does not mean bad information was found in every account, Mooney said. The bureau checked a handful of credit reports with information from SUNY and found enough mistakes to prompt Equifax to err on the side of caution and wipe the data clean, he said.

"Basically, they couldn't be sure of their dates, so we couldn't be sure of their dates," Mooney said.

The student loan center in Rensselaer serves as the central billing and collection office for SUNY campuses, serving all students who have left campus through graduation, transfer or withdrawal. Federal Perkins loans, one of the most common student loans, can be repaid over 10 years.

Kenmore woman victimized

Darlene Hippele of Kenmore was one victim of the data error. SUNY reported Hippele's 1977 bankruptcy as having been filed in 1998. Under provisions of the Fair Credit Reporting Act, negative information more than seven years old is prohibited from credit reports.

Hippele, 51, discovered the problem when she was denied a credit card several weeks ago. The credit card company sent her a letter indicating she was turned down because her Equifax report includes a bankruptcy.

She called Equifax, which refered her to SUNY. She called SUNY and an employee in the Student Loan Service Center refered her to Equifax.

"When I called SUNY, they denied having sent out erroneous information, and they told me to straighten it out with the credit bureau," said Hippele, an Erie County employee. "Their initial explanation was they had made no mistake and the credit bureau dreamed this all up."

Hippele also bought copies of her TransUnion and Experian credit reports, and those agencies had the same bad information. Her Experian report specifically indicates the bankruptcy will not be cleared from her file until 2005.

A TransUnion official said the company is checking information submitted by SUNY.

Experian has also launched an investigation into data reported by SUNY.

Hippele said she finally called the office of New York Attorney General Eliot Spitzer to complain about the Student Loan Service Center. An employee there suggested she send the center a complaint by certified mail, which she did and finally received a satisfactory response from the center.

The SUNY error wiped out any thoughts Hippele has about getting a car loan to replace her 17-year-old Chrysler New Yorker until she is sure all three of her credit reports have been corrected.

A consumer watchdog in Albany said the state error is no small problem for any former students involved.

"Essentially, they've labeled you a deadbeat. You've become a financial pariah. Particularly, bankruptcies can be devastating to a person's credit," said Russ Haven, legislative counsel for the New York Public Interest Research Group.

Free credit reports sought

A similar problem that occurred in Massachusetts in the 1990s prompted a state law entitling consumers to a free copy of their credit reports each year, Haven said. A county in Massachusetts had incorrectly reported a large number of taxpayers as being delinquent with property taxes, he said.

New York consumers have to pay $8 for each copy of their credit report, though the credit agencies provide a free copy to any consumer who was recently denied credit.

NYPIRG supports passage of a state law requiring the credit agencies to provide a free copy annually to state residents.

"We believe you should have access to the reports to do the preventative checking, so you don't get a rude awakening one day by finding out somebody has resurrected an old bankruptcy," Haven said.

The Student Loan Service Center has straightened out the software problem and corrected its files, Henahan said.

SUNY will resubmit all its account information to Equifax next month under a new, simplified credit reporting system, Mooney said. The state office was already scheduled to switch to the new reporting system this fall, before the problem was uncovered, he said.

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