The Consumer Financial Protection Bureau today put out a report about problems with student loan servicing in the military.
Among the problems identified:
• Military deferments are 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 Servicemembers Civil Relief Act (SCRA) protections continues to be an unnecessary struggle for servicemembers. Servicers still do 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.
No time to read the full report? The Hill has the story.