New CFPB Report Exposes Student Loan Complaints From Service Members
Members of the military who are working to repay private student loans are facing difficulties in the process. That’s the consensus of a new report released by the Consumer Financial Protection Bureau.
The report, which is titled “The Next Front? Student Loan Servicing and the Cost to Our Men and Women in Uniform” and based mostly on consumer complaints filed with the CFPB, explains the hurdles servicemen and women face in obtaining the private student benefits promised to them under laws and programs implemented by Congress, CFPB said.
These laws and programs include the Servicemembers Civil Relief Act, which provides an interest rate reduction to those who acquired student loan debt before going on active duty, and the Income-Based Repayment program, which offers lowered monthly payments according to income level and family size.
There are three central complaint themes in the report, CFPB said: a lack of complete, accurate loan repayment information, difficulty navigating the student loan benefits system, and roadblocks for borrowers who are trying to retrieve their benefits, CFPB said.
“We are concerned that our men and women in uniform are not being given the opportunities they have earned under federal law,” said CFPB Director Richard Cordray. “For all the service our military members give us, the least we can do is protect them from this kind of disservice.”
Student loan debt can negatively affect service members more so than the average consumer, as defaults can impact their security clearances and military careers, and debt can be tough to handle while serving overseas, according to the CFPB.
Citing the National Center for Education Statistics, the bureau said the average, cumulative amount of federal and private student loan debt for active duty service members who graduated college in 2008 was around $26,000.
The CFPB also announced a new, multi-pronged partnership with the Department of Defense that aims to raise awareness about the benefits owed to student borrowers serving in the military.
As part of the partnership, the bureau said staff members will train judge advocate generals and education services officers, as well as assist personal financial counselors located on military bases. The agency has also released an electronic guide for service members taking out student loans.
Back in November 2011, the CFPB asked the general public for feedback on the private student lending market. The agency published more than 2,000 complaint-ridden comments online in June, which were followed by the release of a private student loan report with the U.S. Department of Education in July.