U.S. Sen. Barbara Boxer this week led two dozen Senate Democrats in urging the student loan industry to ensure military service members have all the benefits that they’re entitled to by law.
“We were alarmed to learn that some student loan servicers are providing incomplete or inaccurate information regarding service members’ options for reducing their debt —often leading individuals to make decisions that have costly long-term consequences,” the senators wrote to Student Loan Servicing Alliance Executive Director Winfield Crigler. “In one particularly egregious example, a service member was guided toward a deferment plan that ended up increasing his total debt by $25,000. This is simply unacceptable.”
Boxer’s office noted about 41 percent of service members are now carrying student loan debt, and Defense Secretary Leon Panetta said last month that the main reason why troops lose security clearances is because of financial problems.
Congress in the past has enacted loan repayment protections and benefits — such as loan forgiveness programs and interest rate reductions — to help service members manage their debt. But a report issued last month by the Consumer Financial Protection Bureau’s Office of Servicemember Affairs found many military men and women are facing significant challenges in fully accessing these benefits. Specifically, it found that some student loan servicers aren’t providing clear, accurate information about available benefits or are forcing military borrowers to clear unnecessary hurdles in order to access the benefits they deserve.
“Our brave military men and women—and their families—make tremendous sacrifices each and every day in service to our nation. They should never have to fight for full access to the benefits they have earned, including student loan repayment protections,” the senators wrote.
Read the full letter, and a list of signatories, after the jump…
November 19, 2012
Winfield P. Crigler
Student Loan Servicing Alliance
1850 M Street NW, Suite 920
Washington, DC 20036
Dear Ms. Crigler:
We write to bring your attention to the Consumer Financial Protection Bureau’s (CFPB) recently published report, “The Next Front? Student Loan Servicing and the Cost to our Men and Women in Uniform.” We are deeply concerned by the report’s findings, which indicate that some student loan servicers may be wrongly denying service men and women access to the full range of benefits that they are entitled to by law.
As you may know, approximately 41 percent of our military men and women currently have student loan debt. To help service members successfully manage this debt, Congress has put in place a number of important loan repayment protections and benefits. However, it is clear from the CFPB’s report that service members are facing significant challenges in accessing these benefits.
We were alarmed to learn that some student loan servicers are providing incomplete or inaccurate information regarding service members’ options for reducing their debt—often leading individuals to make decisions that have costly long-term consequences. In one particularly egregious example, a service member was guided toward a deferment plan that ended up increasing his total debt by $25,000. This is simply unacceptable.
We were also disturbed to read that service members are being forced to navigate additional, unnecessary hurdles put in place by some student loan servicers in order to access the loan repayment protections they have earned. In particular, servicers should not require active duty military personnel to meet excessive verification requirements to receive or maintain eligibility for interest rate caps under the Servicemembers Civil Relief Act (SCRA) when the Department of Defense makes such information readily available online.
Our brave military men and women—and their families—make tremendous sacrifices each and every day in service to our nation. They should never have to fight for full access to the benefits they have earned, including student loan repayment protections.
As such, we urge you to establish and implement best practice standards to ensure that lenders and servicers provide service members with accurate, comprehensive information about benefits and protections, so these men and women can make informed decisions about their loan repayment options and successfully manage their debt.
Thank you for your consideration of this important request. We look forward to your prompt response.
Barbara Boxer, D-Calif.
Tim Johnson, D-S.D.
Tom Harkin, D-Iowa
John F. Kerry, D-Mass.
Patty Murray, D-Wash.
Patrick J. Leahy, D-Vt.
John D. Rockefeller IV, D-W.Va.
Bernard Sanders, I-Vt.
Barbara A. Mikulski, D-Md.
Dianne Feinstein, D-Calif.
Jack Reed, D-R.I.
Frank R. Lautenberg, D-N.J.
Kirsten E. Gillibrand, D-N.Y.
Benjamin L. Cardin, D-Md.
Claire McCaskill, D-Mo.
Ron Wyden, D-Ore.
Al Franken, D-Minn.
Mark Begich, D-Alaska
Amy Klobuchar, D-Minn.
Mark Udall, D-Colo.
Jon Tester, D-Mont.
Sherrod Brown, D-Ohio
Sheldon Whitehouse, D-R.I.
Richard Blumenthal, D-Conn.