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How Financial Aid History Works

Who Sees Your Financial Aid History
Specifics about your student loans won't show up on your credit report, but it will record whether you made your payments on time.
Specifics about your student loans won't show up on your credit report, but it will record whether you made your payments on time.

Wait a minute, you say. If we continue with the fossil record analogy, it's easy to understand how the bones of dead animals get trapped in rocks, but how does your life's worth of student financial aid become a "history," written down centrally and about as unchangeable as if it were chiseled in stone? Good question.

Your financial aid history gets compiled behind the scenes. If you've applied for student aid from the government, you report some of the information yourself when you fill out the Free Application for Federal Student Aid, or the FAFSA. On the FAFSA, you record your work-study money, grants and scholarships.

The government reports your federal student loans (except those for health professional schools) to the NSLDS, or the National Student Loan Data System [source: DOE]. Your repayment status is also there. While you may not have heard of it, the NSLDS database isn't a secret. You can access it right here. Others can access it too, including schools, the U.S. Department of Education and anyone else who works on assessing your eligibility for federal student loans or collecting your federal loan payments [source: DOE].

In 2007, concern arose that student loan companies were misusing the site, allegedly doing everything from sending advertisements to students who they thought were likely to take loans to rewarding school financial aid officers who frequently referred students to their lending company [source: Glater]. The Department of Education has since tightened its rules on who can access the database and more carefully monitors the activities of the individuals who do [source: Glater].

In addition to being stored in the NSLDS, data on your government loans goes to Equifax, Experian or TransUnion, one of the three credit bureaus in the United States, which write credit reports, or formal report cards on how well you pay back money you owe [source: Sallie Mae].

When you take out private loans, the lender records your payments (or lack thereof) and sends the information to the credit bureaus. Anyone who legitimately orders a credit check on you, from employers to landlords, can see a bureau's credit report on you.

Once the credit bureau has your information and schools have reviewed your FAFSA, is that good or bad news for you? Read on to find out.