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Legion wants comprehensive review of military student loans

The American Legion wants an investigation of all DoE-contracted student loan servicers that have lent to servicemembers, not just the servicer that is known to have violated federal law.

In letters written to House and Senate leaders, the Legion has requested that both chambers of Congress implore the Department of Education to audit all of its contracted private lenders that have lent to servicemembers for potential violations of the Servicemembers Civil Relief Act (SCRA). The Legion's request is spurred by the May 14 settlement between the Department of Justice and Navient (formerly Sallie Mae) in which Navient acknowledged that it violated the SCRA in lending to servicemembers.

The SCRA gives servicemembers who are on active duty certain benefits when borrowing private and federal student loans, including an interest rate of no more than 6 percent. Sallie Mae is alleged to have made the verification process of servicemembers' active-duty status excessively burdensome, including a practice of requiring the servicemember to submit paperwork to prove he or she is on active duty. This violates the SCRA, which requires that loan servicers verify a servicemember's active-duty status themselves.

Amid reports that many other loan servicers had similar practices in place, the Legion wants DoE to investigate all of the other 11 loan servicers that have had contracts with DoE for student lending. These contracts require the servicers to follow all federal laws.

The Legion stated this request in a letter written to Chairman Tom Harkin, D-Iowa, and Ranking Member Lamar Alexander, R-Tenn., of the Senate's Health, Education, Pension, and Labor Committee. A similar letter was sent to Chairman John Kline, R-Minn., and Ranking Member George Miller, D-Calif., of the House's Committee on Education and the Workforce.

The Legion's support of this issue is embodied in Resolution No. 72: Support and Strengthen the Servicemembers Civil Relief Act.

Weeks before the settlement, Sallie Mae separated into two companies - Navient, which services loans the company issued as Sallie Mae and collects on debts - and Sallie Mae, a bank that focuses on originating private student loans. The companies have set aside a reported $173 million to fund settlements with borrowers for violations of federal laws.

If you are a student veteran who feels that you have been misled by a student loan servicer in applying for student loans or receiving benefits under the SCRA, email econ@legion.org and explain the incident.

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