Help with remarks added to account

[emily15]

Hi everyone, I posted awhile back about a "collection" being added to my CR from the US dept of education. Basically, I went to a community college and had a grant overpayment of which I was never notified about until I got a collection notice from the government. I immediately called and paid the collection which was around $130, to which I was told it would never be on any credit reports because I had paid immediately.

When I posted about it here users seemed to think it was not a negative simply because it said 'student loan assigned to government "

Fast forward two years and I just logged into CK today to see a equifax score drop (fako score I know) but credit karma shows what changed, which were only two things, a balance decrease and a remark added to the us dept of education thing. They added "paid collection".

Why would they do this?? And would this cause a score drop?
Also, should I attempt to have this removed??
TIA

edit to add screenshots from today 

[Anonymous]

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@emily15 wrote:

Hi everyone, I posted awhile back about a "collection" being added to my CR from the US dept of education. Basically, I went to a community college and had a grant overpayment of which I was never notified about until I got a collection notice from the government. I immediately called and paid the collection which was around $130, to which I was told it would never be on any credit reports because I had paid immediately.

When I posted about it here users seemed to think it was not a negative simply because it said 'student loan assigned to government "

Fast forward two years and I just logged into CK today to see a equifax score drop (fako score I know) but credit karma shows what changed, which were only two things, a balance decrease and a remark added to the us dept of education thing. They added "paid collection".

Why would they do this?? And would this cause a score drop?
Also, should I attempt to have this removed??
TIA

edit to add screenshots from today 

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I posted about essentially the same thing a few days ago. I had two collections update to paid, and it dropped the bottom out of my scores. So yes, in my experience,  paying a collection (and it reporting as such) can drop drop your score. Absolutely the dumbest algorithm they could come up with. 

[emily15]

I guess I'm wondering why it would be updated as "paid collection " over two years later? And if there is anything I can do at this point? This was paid over two years ago and has been on my report posted without the paid collection comment, then just today changed.. 

[Anonymous]

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@emily15 wrote:

I guess I'm wondering why it would be updated as "paid collection " over two years later? And if there is anything I can do at this point? This was paid over two years ago and has been on my report posted without the paid collection comment, then just today changed.. 

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Yeah, that part doesn't make much sense. Only thing I can think of is that they did review of their old accounts (looking for ones they can make some money on, maybe) and corrected 'errors' when they found them. Maybe updating it as paid keeps them from wasting time in the future by reexamining it when they're looking for things to collect on. 

ETA: you could try disputing it. Since it's old, and paid, they may not bother verifying it. 

[RobertEG]

If the debt was in fact legitimate, then they can refer to  debt collector once it becomes delinquent, and the debt collector can report their collection to a CRA without any prior notice to the consumer.  While prior notice of to the consumer is good business practice, lack thereof is not a violation of either the FCRA or FDCPA.

The Higher Education Act specifically mandates reporting on federal student loans.

You can contact the debt collector and request a good-will deletion, but there is no basis for mandatory deletion other than treating their statement that paying would prevent any credit reporting, and thus filing of your own civil action asserting breach of oral contract.