Today, the Consumer Financial Protection Bureau (CFPB or Burau) released its annual report detailing the financial challenges faced by servicemembers, veterans, and military families. In 2023, this group submitted nearly 84,600 complaints to the CFPB, representing a 27% increase from 2022 and a 98% increase from 2021. The report highlights issues with student loan servicing, transcript withholding by educational institutions, and a rise in scams targeting older veterans.

According to the CFPB, servicemembers and veterans reported significant difficulties in dealing with student loan servicers. The Bureau stated that the return to repayment for federally owned student loans in October 2023 led to a surge in complaints, including:

• Difficulty Contacting Loan Servicers: The CFPB stated that servicemembers, especially those stationed overseas, face challenges in reaching their loan servicers due to time-zone differences and long hold times. Many report that callback features often failed, exacerbating their difficulties.
• Errors in Income-Driven Repayment (IDR) Plans: According to the Report, servicemembers frequently encountered errors in the calculation of their monthly payments under IDR plans. These errors can lead to higher payments and affect eligibility for the Public Service Loan Forgiveness program.
• Transcript Withholding: The CFPB stated that colleges and universities withholding transcripts to collect debts or disputed fees can prevent servicemembers from receiving promotions, securing employment, or completing their degrees. According to the Bureau, this practice is particularly disruptive given the frequent relocations required by military service.

The report also highlights an increase in scams targeting older veterans. In 2023, the CFPB received approximately 9,300 complaints on this issue from older veterans, a 17% increase from 2022. These scams often involve money transfer services and virtual currencies, with older veterans reporting higher average losses compared to the general population.

The report included several recommendations to address the identified challenges:

• Streamline Student Loan Servicing: Federal student loan servicers should consider ways to automatically apply payment options and forgiveness programs for eligible servicemembers and veterans.
• Improve Online Tools: Loan servicers should ensure that online tools are reliably accessible and can meet the customer service needs of servicemembers, particularly those stationed overseas.
• Prevent Transcript Withholding: Educational institutions and policymakers should work to ensure that transcript withholding does not harm military families. Prohibitions on transcript withholding should be broadly applied to protect all students, including those using GI Bill benefits.
• Enhance Fraud Reporting Tools: Veterans should have ready access to tools and resources to report financial complaints, including fraud and scams, to the appropriate federal and state agencies through a single point of contact.

Our Take:

The CFPB’s report highlights issues that the CFPB has already emphasized in other public communications (like customer service difficulties and transcript withholding), but the addition of impacts of these issues on servicemembers and veterans underlines the Bureau’s likely focus on these issues in supervision and enforcement in the future.