May 16, 2019

Senators Warren and Murray Lead Colleagues Expressing Support for Agreement That Will Help Military Borrowers Receive the Zero Interest Student Loan Benefit They Are Owed

Eligible servicemembers have potentially overpaid tens of millions in federal student loan interest payments that they did not owe because of lack of communication between federal agencies

Washington, DC -- United States Senator Elizabeth Warren (D-Mass.) and United States Senator Patty Murray (D-Wash.), Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, led seventeen of their Senate colleagues today in sending a comment letter to the Department of Defense (DOD) Acting Secretary of Defense Patrick Shanahan expressing strong support for the newly-proposed DOD and Department of Education data matching agreement, which will allow eligible military student loan borrowers in combat zones to automatically receive the zero interest federal student loan benefit due to them under existing law. Joining the letter were Senators Maggie Hassan (D-N.H.), Tom Udall (D-N.M.), Edward J. Markey (D-Mass.), Tina Smith (D-Minn.), Jeanne Shaheen (D-N.H.), Bob Casey (D-Pa.), Michael Bennet (D-Colo.), Kamala Harris (D-Calif.), Doug Jones (D-Ala.), Richard Blumenthal (D-Conn.), Kirsten Gillibrand (D-N.Y.), Tammy Duckworth (D-Ill.), Jacky Rosen (D-Nev.), Tammy Baldwin (D-Wis.), Mazie Hirono (D-Hawaii), Tim Kaine (D-Va.), and Bernie Sanders (I-Vt.).

The Higher Education Act currently exempts eligible active duty military borrowers from paying any interest on their federal student loans while they serve in "an area of hostilities." Despite this benefit, eligible servicemembers have overpaid an estimated $100 million in federal student loan interest payments due to a lack of communication between the Departments of Education and Defense. In 2015, the Consumer Financial Protection Bureau estimated that only 633 servicemembers obtained this benefit since Congress created it in 2008, despite the fact that as many as 250,000 borrowers may have been eligible.

DOD's proposed matching agreement with the Education Department would allow the agencies to automate the application of this benefit to eligible servicemembers and veterans using information in existing databases at the Departments of Education and Defense. Both the Senate Armed Services Committee and the Senate Appropriations Committee have also urged the Departments of Education and Defense to establish this agreement. This proposed agreement has been posted in the Federal Register for public comment, and the senators' comment letter serves as public support for this agreement.

"The new matching agreement should allow all eligible servicemembers and veterans-including those who were formerly eligible-to automatically receive refunds for any interest amounts that they paid to the federal government, but never owed," wrote the senators. "Student loan indebtedness can adversely impact the readiness of our military personnel, which is why your work to establish this matching agreement is critical."  

The senators called on the Departments of Education and Defense to work together to ensure that eligible military borrowers who previously made unnecessary interest payments automatically receive appropriate refunds from the federal government. They also called on the Education and Defense Departments not to require any unnecessary, additional paperwork or applications to receive these refunds. The senators urged the Defense and Education Departments to act in a timely manner so that servicemembers and veterans can immediately receive their benefits.

In April 2019, Senator Warren applauded DOD's proposed agreement with the Education Department to get military student loan borrowers the benefits they are owed, a major step in implementing the program and bringing real financial benefits to veterans and servicemembers. Prior to the announcement, Senator Warren successfully included a provision in the Fiscal Year 2018 National Defense Authorization Act Senate Report directing DOD 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. Senator Murray successfully included a similar provision in the Fiscal Year 2018 Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Bill Senate Committee Report.

Senator Warren deeply appreciates the sacrifices and contributions servicemembers and their families make for our country. As a senator, she has also secured new protections for active-duty servicemembers illegally overcharged on federal student loans and helped obtain refunds for over 80,000 military borrowers after pressuring the Department of Education to act. Senator Warren's report and the Education Department's Office of Inspector General investigation she prompted eventually led the Secretary of Education to agree to conduct new reviews and refund money to over 80,000 military borrowers who were overcharged on their federal student loans between 2008 and 2014.