Student Loans to Servicemembers: Report on Servicing Abuses

In July 2015,  the Consumer Financial Protection Bureau issued a report on widespread abuses in student loan servicing for servicemembers which had been reported to the CFPB, including the following:

  • Military deferments denied without adequate explanation, applied in a haphazard way, and, in some cases, are approved verbally but never applied to military borrowers’ accounts, resulting in late fees, defaults and debt collection.
  • Application of SCRA protections continued to be an unnecessary struggle for servicemembers. Servicers still did not appear to understand the elements of the SCRA.
  • Military families struggle with disability discharge, including potential negative credit reporting consequences. They also are unsure whether the benefit is available for private student loans as well as for federal student loans. The uncertainty extends to co-signers looking for the same protections after the disability or death of a primary borrower.
  • In addition to the loss of protections specific to military borrowers, complaints also demonstrate how servicing breakdowns can impact financial and military readiness.

Get full report here:  Overseas & Underserved: Student Loan Servicing and the Cost to Our Men and Women in Uniform

July 2018