CARDIN JOINS OTHER SENATORS IN CALLING FOR END TO OBSTACLES FACING TROOPS BURDENED WITH STUDENT LOAN DEBT

FOR IMMEDIATE RELEASE

CONTACT: Susan Sullam, 410-962-4436

November 20, 2012

CARDIN JOINS OTHER SENATORS IN

CALLING FOR END TO OBSTACLES

FACING TROOPS BURDENED WITH

STUDENT LOAN DEBT

New Report Indicates that Some Student Loan

Servicers May Be Wrongly Denying Service Men

and Women Full Access to Benefits

WASHINGTON – U.S. Senator Ben Cardin (D-MD has joined U.S. Senator Barbara Boxer (D-CA) and a group of 22 other U.S. Senators in sending a letter to the Executive Director of the Student Loan Servicing Alliance urging her 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.

In the letter, the Senators wrote, “We were alarmed to learn that some student loan servicers are providing incomplete or inaccurate information regarding service members’ options for reducing their debt—often leading individuals to make decisions that have costly long-term consequences. In one particularly egregious example, a service member was guided toward a deferment plan that ended up increasing his total debt by $25,000. This is simply unacceptable.”

Approximately 41 percent of our service members are currently carrying student loan debt. According to Defense Secretary Leon Panetta, the main reason why troops lose security clearances is because of financial problems.

 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.

 “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,” the Senators wrote.

In addition to Senators Cardin and Boxer, the letter was signed by: U.S. Senators Tim Johnson (D-SD); Tom Harkin (D-IA); John F. Kerry (D-MA); Patty Murray (D-WA); Patrick J. Leahy (D-VT); John D. Rockefeller IV (D-WV); Bernard Sanders (I-VT); Barbara A. Mikulski (D-MD); Dianne Feinstein (D-CA); Jack Reed (D-RI); Frank R. Lautenberg (D-NJ); Kirsten E. Gillibrand (D-NY); Claire McCaskill (D-MO); Ron Wyden (D-OR);  Al Franken (D-MN); Mark Begich (D-AK);  Amy Klobuchar (D-MN); Mark Udall (D-CO); Jon Tester (D-MT); Sherrod Brown (D-OH); Sheldon Whitehouse (D-RI); and  Richard Blumenthal (D-CT).

The full text of the letter is below:

November 19, 2012

Winfield P. Crigler
Executive Director
Student Loan Servicing Alliance

1850 M Street NW, Suite 920                                                                       
Washington, DC 20036

           
Dear Ms. Crigler:

 We write to bring your attention to the Consumer Financial Protection Bureau’s (CFPB) recently published report, “The Next Front? Student Loan Servicing and the Cost to our Men and Women in Uniform.” We are deeply concerned by the report’s findings, which indicate that some student loan servicers may be wrongly denying service men and women access to the full range of benefits that they are entitled to by law.

 As you may know, approximately 41 percent of our military men and women currently have student loan debt. To help service members successfully manage this debt, Congress has put in place a number of important loan repayment protections and benefits. However, it is clear from the CFPB’s report that service members are facing significant challenges in accessing these benefits.

We were alarmed to learn that some student loan servicers are providing incomplete or inaccurate information regarding service members’ options for reducing their debt—often leading individuals to make decisions that have costly long-term consequences. In one particularly egregious example, a service member was guided toward a deferment plan that ended up increasing his total debt by $25,000. This is simply unacceptable.

We were also disturbed to read that service members are being forced to navigate additional, unnecessary hurdles put in place by some student loan servicers in order to access the loan repayment protections they have earned. In particular, servicers should not require active duty military personnel to meet excessive verification requirements to receive or maintain eligibility for interest rate caps under the Servicemembers Civil Relief Act (SCRA) when the Department of Defense makes such information readily available online.  

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.

As such, we urge you to establish and implement best practice standards to ensure that lenders and servicers provide service members with accurate, comprehensive information about benefits and protections, so these men and women can make informed decisions about their loan repayment options and successfully manage their debt.

 Thank you for your consideration of this important request. We look forward to your prompt response.