The Consumer Financial Protection Bureau’s (“CFPB”) Office of Servicemember Affairs Annual Report was released on September 24, 2024, highlighting areas of concern regarding student lending and noting that the number of complaints that servicemembers filed with the CFPB increased in 2023.

The report identifies trends in complaints, highlights financial services issues impacting servicemembers and veterans, and offers recommendations to improve financial protections for the military community. The 84,600 complaints filed by servicemembers, veterans, or their families in 2023 represented a 27% increase from 2022 and a 98% increase compared to 2021. The most frequent complaints were related to credit or consumer reporting, debt collection, checking or savings accounts, and credit cards. Complaints from active duty servicemembers saw the largest increases in complaints about mortgages, credit cards, and checking or savings accounts, while veterans and retirees reported significant increases in complaints about checking or savings accounts, credit and consumer reporting, and credit cards.

The financial services issues that the CFPB highlighted were the problems servicemembers, their families and veterans reportedly faced in dealing with student loan servicers, including long wait times, challenges reaching servicers, and servicing errors. The bureau said that servicemembers are spending hours trying to reach their loan servicers—an issue that is exacerbated when the consumer is deployed and in a different time zone. Complaints also highlighted problems with enrollment in income-driven repayment plans, which affected eligibility for the Public Service Loan Forgiveness (“PSLF”) program. Additionally, some educational institutions were found to be withholding transcripts, preventing servicemembers from receiving promotions, securing employment, or completing their degrees.

The CFPB offered several recommendations to improve financial protections for servicemembers and veterans:

  • Streamline Payment Options and Forgiveness Programs: The CFPB recommended that federal student loan servicers consider ways to automatically apply payment options and forgiveness programs to eligible servicemembers and veterans.
  • Enhance Online Tools: The CFPB recommended that loan servicers ensure that their online tools are reliably accessible and can meet the customer service needs of servicemembers, especially those stationed or deployed abroad.
  • Address Transcript Withholding: The CFPB recommended that educational institutions and policymakers work to ensure that transcript withholding does not harm military families, particularly those using GI Bill benefits.
  • Improve Access to Reporting Tools: The CFPB recommended that servicers improve access to reporting tools, noting that veterans will benefit from ready access to tools and resources to report financial complaints, including those related to fraud and scams.

Some of the CFPB’s recommendations are operational, such as improving online account access and complaint reporting functionality that would help servicemembers or other consumers who may not be able to readily call their loan servicer with an account issue. The focus on withholding transcripts by educational institutions has been a focus of the CFPB for some time and also been a focus at the state level. Many states, most recently Virginia, have prohibited or regulated that practice.

Perhaps the most striking recommendation is the automatic application of payment options and benefits to servicemembers and veterans. The CFPB has called in the past for automatic application of the interest rate benefit under the Servicemembers Civil Relief Act (“SCRA”) where a loan servicer has information to proactively check their portfolio against the Department of Defense’s Manpower Data Center database (“DMDC”), and the report cites to the Department of Education’s action in 2023 to grant interest rate benefits to more than 47,000 servicemembers. This call for proactive provision of federal benefits with established application procedures has now been extended to PSLF.

Finally, the Bureau reported that companies provided timely responses to the complaints filed with the CFPB, adding that 36% of the complaints were closed within 15 days and 99.5% were closed within 60 days.