The agency promised to review the records of all its servicers to make sure the violations were not widespread, and it later announced there was little evidence of wrongdoing. But a report released last week by the inspector general rebutted the department’s claims and characterized the investigation as deeply flawed. In the wake of the inspector general’s report, Senate Democrats, including Elizabeth Warren (Mass.) and Patty Murray (Wash.), asked the department to rescind the review of its four largest servicers — Navient, Great Lakes, Nelnet and American Education Services — and take further steps to refund victims.
“It is unfair and unacceptable for service members whose loans were not covered by the Department of Justice settlement to be denied the same financial relief simply because of which loan servicer held their loan,” the senators wrote in the letter. “The Department has the ability to correct this injustice and ensure that each service member is refunded interest rate overcharges for federal student loans incurred while they were on active duty.”
On Monday, King announced the move to refund more military borrowers in a written response to questions raised by senators during his recent confirmation hearing. He said the department “initiated a process to conduct a data match and automatically provide credit for any servicemember who was on active duty since federal student loans became eligible for the benefit. This would provide the benefit to any servicemember who was on active duty, going back to 2008, whether or not they had applied for the benefit.”
In the wake of the Navient case, the department simplified the process for service members to have their loan rates adjusted when they are called to active duty. Instead of service members having to provide proof of active-duty status, servicers can now match their loan portfolios against the Department of Defense’s database of active-duty troops to automatically grant the benefit. As a result, the number of active-duty troops receiving the interest rate cap has grown by roughly 300,000, more than 10 times higher than before.
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