Letter to the Hon. Ashton Carter, Secretary, U.S. Department of Defense and the Hon. Arne Duncan, Secretary, U.S. Department of Education - Redouble Efforts to Protect Military Consumers

Letter

Dear Secretary Carter and Secretary Duncan:

We write regarding the continuing breakdowns in student loan servicing, which are costing military families time, money, and earned benefits.

To offer just one example, this June, service members who were denied their Servicemembers Civil Relief Act (SCRA) rights by student loan servicer Navient were to begin receiving $60 million in compensation under the settlement reached with the Department of Justice. This was followed by the findings in a July report by the Consumer Financial Protection Bureau (CFPB) that documented some of the ongoing challenges that military families face with their student loans, many of which were the same problems reported in 2012. The CFPB also recently published a report focused on service members' credit reports, which are impacted by student loans. According to the CFPB, less than one percent of service members reported putting an Active Duty alert in place on their credit reports before leaving for active duty. Identity theft or errors in a service member's credit report can be particularly problematic as they may impact the service member's security clearance or military career prospects.

In light of these ongoing difficulties, we ask that you redouble your efforts to ensure that service members get complete, accurate, and timely information about their student loans, SCRA protections, loan forgiveness and other benefits, repayment options, and the tradeoffs among the options so that they can make the best and most informed choices for themselves and their families. As you undertake this vital task, we would appreciate responses to the following questions:

Since so many of the problems raised by the CFPB point to a fundamental lack of understanding of law and policy as it pertains to service members with student loans, and the resulting confusion that ensues when these borrowers attempt to exercise their benefits, how are you ensuring that student loan servicers and service member advisors receive adequate training and education to address the unique needs of these borrowers and their families?

How are you ensuring effective coordination between the Department of Defense Student Loan Repayment Program and the Department of Education Public Service Loan Forgiveness Program so that service members receive the full range of benefits that they have earned? What internal controls and procedures does each Department have in place to ensure that service members are in the appropriate repayment plan and that payments are properly credited to the service member's loans?

How is each Department providing clear and sufficient guidance to student loan servicers and service member advisors about SCRA protections, including the potential loss of such protections when a service member consolidates loans, and the impact that different repayment or deferment options can have on eligibility for other benefits such as the Public Service Loan Forgiveness Program? How does each Department ensure that when SCRA protections lapse, service members are notified and made aware of the impact?

How is each Department ensuring that student loan servicers assist service members in selecting the best repayment options for their individual circumstances and are not steering them to less optimal choices based on ease of administration? What specific enforcement mechanisms does each Department utilize to ensure that service members receive non-biased advice?

How is each Department working with the CFPB, particularly the Office of Servicemember Affairs, to prioritize addressing the complaints that the CFPB has received from service members, veterans, and their families? How is each Department working with any other federal agency that has authority to enforce the SCRA?

How is each Department ensuring that student loan servicers are providing adequate information to service members about Active Duty alerts, security freezes, or other options for service members to manage their credit reports while they are on active duty?

Thank you for your attention to this important request on behalf of our nation's service members and their families. We look forward to your prompt response.