New Report on Military Student Borrowers
Many members of the military with student loans are missing out on important benefits, in part because loan servicers aren't giving them accurate information, according to a report released Thursday by the Consumer Financial Protection Bureau dealing with how student debt is handled for active-duty members of the military. Those in service are eligible both for benefits available to all Americans with federal loans, such as income-based student loan repayment, as well as some benefits available just to them, like military deferments, post-active duty deferments and an interest rate cap while on active duty.
The report found that loan servicing errors lead to unnecessary hurdles and, in some cases, deferments and forbearances. Some members of the military were denied the 6 percent interest rate cap on both federal and private loans. Others were put into forbearance they did not request, meaning that interest continued to capitalize. In some cases, these errors could cost members of the military tens of thousands of dollars, according to the report, which marked the bureau's first steps into identifying problems with federal student loans as well as private loans.
The bureau urged loan servicers to give members of the military complete and accurate information, and regulators and enforcement agencies to hold servicers accountable. "Servicemembers who are concerned about financial problems and who must struggle to get complete information or assistance from their lenders will have difficulty focusing on their mission and accomplishing their critical national security role," the authors, the student loan ombudsman Rohit Chopra and Hollister Petraeus, assistant director of the bureau's office of servicemember affairs, wrote.