April 15, 2019
Senator Warren Applauds Proposed Agreement to Get Military Student Loan Borrowers the Benefits They Are Owed
Washington, DC – United States Senator Elizabeth Warren (D-Mass.) today released the following statement regarding the announcement that the Department of Defense has proposed a new agreement with the Department of Education to automate for servicemembers a benefit that exempts them from paying any interest on their federal student loans while serving in war zones.
Since 2008, the Higher Education Act has included a provision that removes the interest on military borrowers’ student loans while they are serving in areas of hostilities. However, because the Defense and Education Departments lacked a program for implementing the law and communicating with each other to determine which servicemembers qualified for the 0% interest loans, many military borrowers never received or learned of this benefit. The Consumer Financial Protection Bureau (CFPB) estimates that eligible military borrowers have overpaid more than $100 million dollars in unnecessary interest charges to the federal government due to a lack of communication between the Departments of Defense and Education.
“Hundreds if not thousands of military borrowers eligible for 0% interest student loans were denied them because of bureaucratic red tape,” said Senator Warren. “Today, I was glad to see the Defense Departments propose an agreement with the Education Department to ensure that military student loan borrowers receive the benefits they are owed under the law. I’d also like to see servicemembers and veterans receive refunds for interest they never owed, but paid anyway.”
Senator Warren successfully included a provision in the Fiscal Year 2018 NDAA Senate Report directing the Defense Department to automate the application of student loan benefits available to eligible servicemembers, including the 0% interest benefit, using information in existing federal databases at the Departments of Education and Defense to ensure that military student loan borrowers received the benefits they are owed under the law.
Today, the Defense Department announced it has submitted the agreement to the Federal Register for public comment, a major step in implementing the program and bringing real financial benefits to veterans and servicemembers.
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