Relief for Servicemembers and Veterans

Abstract

Policymakers have long acknowledged the link between financial readiness and military readiness and that unique financial stresses imposed by military life can impede America’s national security. In fact, Congress has repeatedly taken steps to mitigate the acute financial burden servicemembers face by crafting military-specific protections during repayment of consumer debt, including interest rate caps and servicing requirements when military consumers are on active duty. Over the last two decades, as the student debt crisis has emerged within the ranks of the military, Congress has targeted repayment benefits and protections to servicemembers with student debt. Congress took action to help servicemembers by establishing the Public Service Loan Forgiveness (PSLF) program, which provides debt relief to borrowers working in public service, including members of the military, after ten years of payments. In practice, the PSLF program has proven to be an essential recruiting and retention tool across each of the military services that supports the financial readiness of our nation’s armed forces. Many servicemembers plan both their financial lives and military careers around the promise of loan forgiveness. But as discussed in an accompanying piece in this compendium, the promise of PSLF has been broken, including for individuals in uniform. While the broken promise of PSLF will undoubtedly harm millions of borrowers, this article focuses specifically on the acute harm military borrowers face in seeking to access vital student loan protections, largely due to needless administrative burdens that are exacerbated by poor servicing practices. Additionally, this article examines the legal authority under which the Secretary of Education can effectuate the intent of Congress to use the HEROES Act to remedy these harms by providing relief for hundreds of thousands of servicemembers and veterans with student debt.