Dive Brief:
- The results of the Department of Education’s yearlong probe into loan servicer treatment of military borrowers revealed virtually no wrongdoing by the government’s four major contractors.
- The Chronicle of Higher Education reports the investigation found that Navient, Great Lakes, the Pennsylvania Higher Education Assistance Agency, and the National Education Loan Network improperly withheld interest rate reductions for active duty military personnel in less than 1% of cases.
- The findings are based on Department policy that only required servicers to offer the rate reduction when asked to in writing by military members who could prove their active duty status, a policy the Department of Justice has considered too cumbersome for borrowers.
Dive Insight:
The Department of Justice found Navient (spin off from Sallie Mae) failed to offer the rate reduction to 93% of active-duty borrowers, according to the Chronicle, but its analysis was based on the expectation that servicers should offer the reduction whenever loan applicants requested other military benefits. DOJ and Navient, which admitted no wrong, reached a $60 million settlement last year. The Department of Education has shifted its policy amid harsh criticism from politicians and veterans groups. Now, the department’s servicers must proactively offer the rate reduction, which active-duty military personnel are entitled to under federal law. While the Department of Education’s findings are no surprise, many still will be disappointed by the Department’s lack of teeth in protecting student borrowers.