Senators Call for End to Student Lending Abuses Hurting Our Troops
By Consumers Union on Tuesday, November 20th, 2012
Yesterday, Senator Barbara Boxer (D-CA) led a group of 24 Senators in writing to the Executive Director of the Student Loan Servicing Alliance, an industry trade group, urging them to establish best practices to ensure that service men and women have access to the full range of student loan benefits that they are entitled to by law.
The letter condemns some egregious violations and bad practices that prevent service men and women from asserting their rights as student loan borrowers – rights which are significant. Over the years, Congress has enacted many important loan repayment protections and benefits—such as loan forgiveness programs and interest rate reductions—to help service members successfully manage their debt. However, a report issued last month by the Consumer Financial Protection Bureau’s (CFPB) Office of Servicemember Affairs found that many military men and women are facing significant challenges in fully accessing these benefits. Specifically, the report found that some student loan servicers are not providing clear, accurate information about available benefits or are forcing military borrowers to clear unnecessary hurdles in order to access the benefits they deserve. These bad practices can cause service men and women to pay thousands more on their loans than they should be, or put them into default unnecessarily.
Protecting servicemembers’ rights when it comes to student loans is crucial – not just to the servicemembers themselves, but to national security. As Defense Secretary Leon Panetta recently reported, approximately 41 percent of all servicemembers have student loan debt, and the main reason why troops lose security clearances is because of financial problems.
The Senators conclude by pointing to the fundamental fairness that’s at stake: “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.”
Do you or someone you know serve in the military, and have difficulty navigating the student loan process? If so, please tell us in the comment section below.