A report released on Tuesday by the Consumer Financial Protection Bureau highlights continuing problems that military borrowers face when interacting with student-loan servicers.
The federal agency’s report comes two months after the Education Department cleared student-loan servicers following a yearlong investigation of their treatment of military borrowers. Holly Petraeus, the bureau’s assistant director for service-member affairs, said in a conference call on Tuesday that the report “documents detours and dead ends for military borrowers.”
Ms. Petraeus said that, after a review of 1,300 complaints from military borrowers and their families, the bureau had found that borrowers do not receive “clear or correct information” when applying for benefits or asking whether they qualify for specific benefits. She said the complaints also included customer-service “breakdowns” that could lead to borrowers’ defaulting on their loans.
Military borrowers are entitled to a 6-percent interest rate on student loans, but a 2014 report from the Department of Justice said that one servicer had denied the benefit to 93 percent of borrowers. The Education Department began investigating student-loan companies in May 2014, after another servicer, Navient, agreed to pay the Justice Department $60 million to settle claims that it had failed to provide the interest-rate benefit.
Military borrowers “do not need lip service,” Ms. Petraeus said, but should know what benefits may apply to them and how federal loans may differ from private loans.
“It’s not enough for servicers to say they support their military borrowers,” she said. “Student-loan servicers still need to do more to improve practices that are hurting military families.”
