The U.S. government is starting a program designed to help military personnel with student-loan debt learn more about options to lower their interest rates or defer repayment.
A partnership announced today between the Consumer Financial Protection Bureau and the Pentagon comes as the bureau released a report finding many servicemembers who want to pay off their student-loan debt get too little information about repayment benefits offered to active-duty members of the military and sometimes face roadblocks from loan servicers when they seek to utilize them.
“We are concerned that our men and women in uniform are not being given the opportunities they have earned under federal law,” Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement. “For all the service our military members give us, the least we can do is protect them from this kind of disservice.”
The joint program will include training for Judge Advocate Generals and personal-finance counselors on military bases.
Military personnel often have a mix of federal and private student loans to repay, with the average cumulative amount of student loan debt for active-duty military personnel graduating from college in 2008 reaching $26,000, according to the National Center for Education Statistics.
Programs available to servicemembers include interest-rate reductions to those in uniform who acquired their debts before starting active duty, loan deferral or principal reduction options for service in hostile areas and loan forgiveness in some instances.
The consumer bureau’s study found military personnel sometimes have trouble learning about the programs, often because loan servicers don’t offer enough information about their repayment options. The stakes are high, because the servicemembers can face tens of thousands of dollars in added debt over the life of their loans, the bureau said.
In other cases, loan servicers put in place roadblocks, such as requirements that paperwork be resubmitted to take advantage of interest-rate protections, even if the military borrower is in a combat zone, the study found.
“Many servicemembers are entering the armed forces with, and sometimes because of, substantial student-loan debt,” Holly Petraeus, who heads the consumer protection bureau’s Office of Servicemember Affairs, said today at a Pentagon news conference.
“Unfortunately, they are not always getting the information they need about programs and policies that could help them reduce that debt significantly while they’re on active duty,” said Petraeus, who is married to Central Intelligence Agency Director David Petraeus, who formerly was the top U.S. and NATO commander in Afghanistan.