Senate Democrats demanded in a Thursday letter that the Department of Education rescind findings from a 2015 review of major student loan servicers and issue refunds to military student borrowers who have overpaid due to high interest rates.
Democratic Sens. [crscore]Patty Murray[/crscore] of Washington, [crscore]Elizabeth Warren[/crscore] of Massachusetts, [crscore]Richard Blumenthal[/crscore] of Connecticut and Dick Durbin of Illinois wrote the letter after the department’s inspector general, Kathleen Tighe, issued a report that was critical of the 2015 review.
The 2015 review examined major student loan lenders Navient, Great Lakes, PHEAA and Nelnet, originally claiming that these lenders complied with the Servicemembers Civil Relief Act (SCRA). The inspector general’s recent report finds that this review is “unsupported and inaccurate.”
“The Department has the ability to correct this injustice and ensure that each servicemember is refunded interest rate overcharges for federal student loans incurred while they were on active duty,” the senators wrote Thursday. “When men and women in uniform serve our country, they shouldn’t have to worry about our government holding up its end of the bargain.”
Federal law states that interest rates on student loans for military members on active duty must be capped at six percent. Major loan servicers have overcharged many military students, and the Department of Education hasn’t done much to stop them, according to the senators.
In 2014, the Justice Department settled with lender Navient, ordering it to pay back $60 million to more than 100,000 students on active military duty who were overcharged on interest rates.
The senators explained in their August 2015 letter that they were not satisfied with the findings of the department’s review, and suspected that loan servicers other than Navient were also at fault.
“Eligible service members whose loans happened to be service by a servicer other than Navient have not received any compensation for the interest they were unlawfully charged above six percent while on active duty,” the letter stated.
“The men and women in uniform who were overcharged on their student loans while serving our country deserve better.”