Report: Military personnel face issues receiving student loan benefits

Service members are running into roadblocks trying to access benefits for military personnel to pay back student loans, according to a new report from the Consumer Financial Protection Bureau (CFPB).

The report, released Thursday, found numerous complaints from members of the military over paying back student loans that went beyond those faced by non-military student borrowers.

Defense Secretary Leon Panetta warned that some student loan companies could be violating the law by denying military personnel benefits they're entitled to.

“I’m concerned that the report being issued today warns of student loan companies that not only may confuse service members, but may even violate the law in the approach that they take,” Panetta said at a Pentagon briefing about the new report.

“It should be easier, not tougher, for service members to pay off their college debt,” he said.

Among the issues were difficulties accessing benefits available for serving in combat, and military borrowers being denied interest-rate protections because they failed “to re-submit unnecessary paperwork.”

Holly Petraeus, assistant director at CFPB’s Office of Servicemember Affairs, said the issues are similar to problems in the mortgage industry, where she said the Government Accountability Office documented at least 15,000 cases of financial institutions failing to properly reduce mortgage interest rates and 300 illegal foreclosures.

She said that part of the solution is to provide military personnel with better information, but she said that lenders were also at fault for providing bad information. One problem she cited was service members being told they weren't entitled to a 6 percent rate cap under the Servicemembers Civil Relief Act unless they were in a combat zone, which is not true.

Panetta said that 41 percent active-duty personnel have some kind of student loan debt and noted that financial issues were the No. 1 reason for the loss of Pentagon security clearances.

The CFPB report said that military personnel who graduated from college have an average of $26,000 in student debt.

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