TESTIMONY OF

MR. WILLIAM HUBBARD

VICE PRESIDENT OF EXTERNAL AFFAIRS
STUDENT VETERANS OF AMERICA
BEFORE THE
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER PROTECTION
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
U.S. SENATE
LEGISLATIVE HEARING ON THE TOPIC OF:
STUDENT LOAN SERVICING: THE BORROWERS EXPERIENCE
JUNE , !"#
Student Veterans of America
1625 K STREET NW, STE 320
WASHN!T"N, #$ 20006
%%%&student'eterans&or(
www.studentveterans.org
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Chairman Brown, Ranking Member Toomey and members of the subcommittee:
Thank you for inviting Student Veterans of merica !SV" to submit our testimony on #Student $oan Servicing:
The Borrower%s &'(erience)* s the (remier advocate for student veterans in higher education, it is our (rivi+ege
to share our on,the,ground (ers(ective with you today)
In -../, veterans in co++eges and universities across the nation came together to form SV) 0sing a network of
(eer,to,(eer re+ationshi(s and determined to achieve beyond e'(ectations, these veterans re+ied on their mi+itary
training and ski++s to succeed in higher education 1 sometimes whi+e simu+taneous+y serving in our mi+itary)
SV%s to( (riorities inc+ude im(roving access to higher education and sca+ing effective services that em(ower
veterans to graduate on time, with +itt+e,to,no student debt, we++,(re(ared for fu+fi++ing futures) 2e +ook forward
to this im(ortant conversation and ho(e to share the (ers(ective of veterans in higher education with this
subcommittee)

C$%%&'( I))$&)
The First Step: Greater Access to Information
s veterans graduate across the country, we be+ieve that their student debt burden wi++ be one of the +argest
inhibiting factors to their +ong,term success) This issue is (art+y the resu+t of the +ack of access to information at
individua+ and institutiona+ +eve+s) Veterans consistent+y cite the fo++owing cha++enges: difficu+ty obtaining
accurate information about +oans, convo+uted (athways to gathering information or im(+ementing (rograms, and
unnecessary roadb+ocks (ut in (+ace by servicers) These three issues manifest in various ways as servicemembers
and veterans seek to (ay off their education debt)
&nsuring that servicemembers and veterans are ab+e to base their borrowing decisions on sound information is of
the utmost im(ortance to SV) In the Consumer 3inancia+ 4rotection Bureau%s !C34B" mid,year re(ort re+eased
this (ri+, comments were co++ected from more than 5,6.. individua+s with student debt) 7f the to( 8 com(+aints
re(resenting 96: of the res(onses, a++ were re+ated to misinformation) These inc+ude: communication tactics,
continued attem(ts to co++ect debt not owed, disc+osure verification of debt, fa+se statements or re(resentation, and
im(ro(er contact or sharing of information)
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;es(ite avid efforts to increase (rotections against abusive (ractices, getting servicemembers and veterans the
right information about those (rotections at the right time remains a cha++enge) Servicemembers and veterans have
access to (rotections under the Servicemember Civi+ Re+ief ct !SCR" and access to many different student +oan
re(ayment o(tions) 0nfortunate+y, this web of su((ort does not function cohesive+y and (rograms often function
inde(endent of each other)
The Unspoken Burden of Existing Debt
7f (articu+ar concern, we have seen that many servicemembers enter the mi+itary with (re,service student +oan
5
Consumer 3inance 4rotection Bureau, -.5<, #Mid,year u(date on student +oan com(+aints*,
htt(:==fi+es)consumerfinance)gov=f=-.5<.<>cf(b>midyear,re(ort>(rivate,student,+oans,-.5<)(df, (g) ?
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debt) This e'isting debt is a+so a ma@or source of the overa++ debt owned by servicemembers and veterans) Though
some sti++ be+ieve that on+y officers are co++ege,educated, the sim(+e fact is that today%s (rofessiona+ mi+itary is the
most high+y educated a++,vo+unteer force that this country has ever seen) &'isting debt is (articu+ar+y harmfu+ to a
servicemember or veteran when servicers do not com(+y with (rotections afforded by the SCR)
s the +oan servicing system stands now, there are many other scenarios that (resent additiona+ obstac+es for
servicemembers and veterans) 3or e'am(+e, a servicemember who took out student +oans to attend schoo+ (rior to
en+isting has many re(ayment o(tions avai+ab+e) Aowever, when they ca++ their +oan servicer to discuss such
o(tions, the ty(ica+ res(onse is that the servicemember can defer (ayments unti+ they return from de(+oyment)
2hi+e that might sound he+(fu+, the servicemember (robab+y wasn%t informed that they wi++ continue to accrue
interest) The s(ark+ing dea+ they were @ust #so+d* resu+ts in their B8.k +oan becoming a BC8k burden) In effect, this
deferra+ is akin to (urchasing a car without knowing the true cost)
Additiona Factors for Borro!ers
There is a common misconce(tion that veterans who go to schoo+ on the DI Bi++ have a #free ticket*, but we know
that this is sim(+y not true) s an earned benefit, not on+y is the DI Bi++ not free, it may not a+ways cover the fu++
cost of an education) This is es(ecia++y true for those attending (rivate institutions or considered out of state
residents) 3urthermore, as Euintessentia+ nontraditiona+ students, take +onger to com(+ete their degree) In such
scenarios, veterans +ike+y take on additiona+ +oans to com(+ete their (rograms or risk sto((ing short of graduation)
Student +oans are a rea+ity for both servicemembers and veterans) 3ormer Secretary of ;efense $eon 4anetta
noted that <5: of servicemembers were dea+ing with education +oan debt and that in some cases, this was +eading
to +oss of security c+earances)
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$ast year, the ssistant ;irector F Student $oan 7mbudsman for C34B testified before this committee on severa+
e'am(+es of misconduct by +oan servicers) Ae cited cases where servicemembers were e'(ected to @um( through
e'cessive or im(ossib+e hoo(s to invoke their (rotections) In one case, a servicemember ca++ed their +oan servicer
to try to c+aim the ?: interest rate ca( under the SCR, but instead of +owering the high interest rate +oans to ?:,
the +oan servicer raised the +ow interest +oans on a++ their other +oans)
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In other cases, servicemembers wi++ seek to conso+idate and=or refinance their student +oans, on+y to find that they
then +ose the (rotections under the SCR) t the root of this issue, servicemembers do not have access to c+ear
and actionab+e information about their student +oans from their +oan servicers)
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dditiona++y, Gationa+ Duard and Reservists do not a+ways receive the same DI Bi++ ratings as their active duty
counter(arts, which can +ead to high amounts of borrowing) The most recent ;e(artment of ;efense !;o;"
demogra(hic re(orts show that we++ over one,third of our mi+itary service members serve in the Duard or
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Stars and Stri(es, -.5-, #Gew (artnershi( aims to (rotect troo(s against student +oan (rob+ems*, htt(:==www)stri(es)com=news=new,
(artnershi(,aims,to,(rotect,troo(s,against,student,+oan,(rob+ems,5)59688.
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Cho(ra, Rohit, -.56, #Testimony of Rohit Cho(ra Before the Senate Committee on Banking, Aousing, and 0rban ffairs*,
htt(:==www)consumerfinance)gov=newsroom=the,cf(b,before,the,senate,committee,on,banking,housing,and,urban,affairs=
<
B+oomberg Business2eek, -.5-, #Mi+itary Student,$oan Borrowers to Det More 0)S) dvice*,
htt(:==www)businessweek)com=news=-.5-,5.,5/=mi+itary,student,+oan,borrowers,to,get,more,u,dot,s,dot,advice
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Reserve)
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7f these com(onents, it is very c+ear that the DI Bi++ does not cover a++ education e'(enses)
2hi+e many veterans may not have a c+ear understanding of how their education benefits wi++ im(act their overa++
cost of attendance, others face abusive and mis+eading (ractices across sectors of education which resu+ts in undue
and unnecessary debt burdens)
2e remain concerned that some technica+ and career co++eges c+aim that their (rograms wi++ +ead to credentia+s
and certifications, when in rea+ity these (romises are ho++ow) ;ue to a +ack of (ro(er accreditation, some students
in these schoo+s rea+iHe that they wasted years of va+uab+e benefits and have nothing to show for it) 2e a((+aud
the bi(artisan efforts of the doHens of State ttorneys Denera+ working to curb this (ractice among the worst
offenders, and wou+d +ike to work with this committee and the Congress to im(rove the +aws (reventing this
des(icab+e (ractice)
The "ase Stud# of Saie $ae
In one of the most egregious cases, Sa++ie Mae was e'(osed for a +aundry +ist of abusive (ractices) The com(any
vio+ated the (rotections of the SCR in numerous ways, and the 3;IC noted that, #Sa++ie Mae vio+ated federa+
+aw (rohibiting unfair and dece(tive (ractices in regards to student +oan borrowers)*
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mong the many
infractions, they were cited for, #misre(resenting and inadeEuate+y disc+osing in its bi++ing statements how
borrowers cou+d avoid +ate fees,* and #fai+ing to (rovide com(+ete SCR re+ief to servicemembers after having
been (ut on notice of these borrowersI active duty status)*
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These actions are ine'cusab+e and the sett+ement was a
c+ear signa+ that they wi++ not be to+erated) 2hi+e Sa++ie Mae%s start+ing infractions have been brought to +ight, it is
c+ear that simi+ar tactics continue to be im(+emented throughout the industry)
To i++ustrate the cha++enges faced by servicemembers and veterans, it is worth digging dee(er into Sa++ie Mae%s
B?. mi++ion sett+ement with the ;e(artment of JusticeKthe resu+t of mistreating a re(orted ?.,... service
members)
/
In the C34B%s Consumer Com(+aint ;atabase !as of June -nd", Sa++ie Mae was the to( offender, with
6,??< forma+ com(+aints being fi+ed, re(resenting near+y 8.: of the tota+ com(+aints) The ne't c+osest was
&S=4A& with a tota+ of C98 com(+aints) Diven the vo+ume of com(+aints re(orted about the com(any%s
(ractices, it shou+d have come as no sur(rise that they were taking advantage of the mi+itary and veteran
community systematica++y)
0+timate+y, it was a member of the mi+itary community who fi+ed a com(+aint about these harmfu+ (ractices that
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((ro'imate+y /</,... of 5)69 mi++ion members of the armed forces in -.5- were cited as reservistsL ;e(artment of ;efense, -.5-,
;emogra(hics 4rofi+e of the Mi+itary Community,
htt(:==www)mi+itaryonesource)mi+=5-.6/=M7S=Re(orts=-.5->;emogra(hics>Re(ort)(df, (g) vi
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3;IC, -.5<, #3;IC nnounces Sett+ement with Sa++ie Mae for 0nfair and ;ece(tive 4ractices and Vio+ations of the Servicemembers
Civi+ Re+ief ct*, htt(:==www)fdic)gov=news=news=(ress=-.5<=(r5<.66)htm+
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Ibid)
/
;e(artment of Justice, -.5<, #Justice ;e(artment Reaches B?. Mi++ion Sett+ement with Sa++ie Mae to Reso+ve ++egations of Charging
Mi+itary Servicemembers &'cessive Rates on Student $oans*, htt(:==www)@ustice)gov=o(a=(r=-.5<=May=5<,ag,8.-)htm+
<
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brought the offenses to +ight) The critica+ factor here was that a servicemember understood his rights) Though the
case of Sa++ie Mae high+ighted e'(+icit misconduct, there are a+so situations invo+ving (ractices that are +ess
obvious)
The %eed for &oan Data Aggregation
To catch situations that may vio+ate a servicemember or veterans% rights, we be+ieve that institutions need access
to a fu++ range of financia+ data) This ste( is necessary for institutions to be ab+e to effective+y counse+ their
students about their financia+ future) Individua+s shou+d a+so have access to this data to achieve the highest +eve+ of
consumer awareness)
Current+y, there is no wide+y used system that wou+d a++ow any individua+ with education debt to see a++ of their
+oans in a centra+iHed (+ace) Aowever, M&T&7R, run by the Gationa+ Student C+earinghouse !GSC", cou+d be
such a too+) M&T&7R (rovides student borrowers with rea+,time access to a++ higher education +oan data for free
through a sing+e (orta+ without com(romising the security of the data) M&T&7R is an o(en source (+atform that
a+so has the ca(acity to inc+ude V benefits and a++ +oans, (rivate and federa+, in one screen (resentation)
M&T&7R%s ca(abi+ity to (rovide instant access to rea+,time +oan ba+ances can im(rove a veteran%s abi+ity to
manage their +oans, which are often so+d mu+ti(+e times to various servicers) This (roduct o(ens the door for
veterans and active duty (ersonne+ to manage and fo++ow their debt no matter where they are) This function a+so
a++ows schoo+s to (roactive+y (rovide +oan counse+ing to students before the burden of debt becomes
insurmountab+e) This system is current+y ready to +aunch, but reEuires the re+ease of ;irect $oan data from the
;e(artment of &ducation !&;") The M&T&7R (rogram has the uniEue function of (roviding a++ (rivate +ender
data and wou+d sim(+y reEuire a((rova+ from &; to access the ;irect $oan data, which has yet to ha((en)
The issues identified in this testimony continue to be wides(read and +end to the growing mass of B5)- tri++ion in
education debt for 0)S) students) 2ithout addressing the need for greater trans(arency and accuracy of
information, there wi++ be no reasonab+e so+ution to curb this cha++enge)
D&(%*+&'(,- I+.,/()
2hi+e we might not know the fu++ affect of student debt on this generation of veterans, we are beginning to see the
first and second order of affects now) Servicemembers and veterans with student debt are significant+y +ess +ike+y
to bui+d their own business, buy a home, or save for their retirement) The second and third order effects of these
issues wi++ im(act the economy for years to come and continue to distort economic behavior if not contro++ed)
In a recent artic+e in the Chronic+e of higher education, it was noted that, #Res(ondents with any kind of debt
re(orted +ower we++,being financia++y, (sycho+ogica++y, (hysica++y, and in terms of +ife satisfaction) 2ithin
categories of em(+oymentKfu++ time, (art time, and unem(+oyedKres(ondents with debt re(orted +ower we++,
being than did their unindebted (eers)*
9,5.
This new research determined that those with any +eve+ of debt
e'(erience significant decreases in their we++,being)
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Chronic+e of Aigher &ducation, -.5<, #- Mears 7n, Two,Thirds of This Draduating C+ass ren%t 3inancia++y Se+f,Sufficient*,
htt(:==chronic+e)com=artic+e=-,Mears,7n,Two,Thirds,of,This=5<?/56=N
keyODmgmIgVtPCI2Mn/-MHoRaD8246M=Mh9?GndDMio@b++Q&w:6;:6;
5.
0niversity of riHona, -.5<, #$ife fter Co++ege: ;rivers for Moung du+t Success*, htt(:==a(+us)ariHona)edu=wave,6,re(ort)(df
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F$($%& S0-$(*0')
In +ight of the issues we have identified, SV su((orts the fo++owing (o+icy so+utions:
5) Automatic Ser'ice Status "onfirmation: Some servicers reEuire individua+ servicemembers to certify their
mi+itary status on an annua+ basis or more freEuent+y, des(ite having access to ;o; databases that cou+d
a++ow them to easi+y accom(+ish the reEuired task) SV encourages Congress to com(e+ +oan servicers to
automate this status confirmation (rocess via ;o;%s database, thus +ifting the burden off of individua+
servicemembers who may not be ab+e to certify their status due to de(+oyments or other duties) This
wou+d increase the time+iness of these confirmations as we++ as increase the accuracy of the
determinations, whi+e reducing the reEuirement to com(+ete frivo+ous (a(erwork)
-) S"(A Durabiit# ) "onsoidations
**
: Servicemembers may be forced to choose between the (rotections
afforded through SCR and the o(tion to (ursue +oan conso+idation) SV wou+d +ike to see SCR%s
(rotections maintained regard+ess of how +oans are conso+idated) 2e wou+d a+so +ike to see rigorous
consumer education inc+uded when this financia+ o(tion is (ursued) ggregating +oans into one (ayment
a++ows those +oans to kee( (rotections that are recogniHed by the +aw) This aggregation wi++ (reserve the
intent of the (rotections afforded under SCR)
6) S"(A Durabiit# ) (efinancing: Simi+ar to conso+idations, SCR (rotections are often +ost when
individua+s (ursue refinancing o(tions for their +oans) SV wou+d +ike to see SCR (rotections e'tended
throughout the +ife of the +oan, inc+uding if a servicemember chooses to refinance)
<) Disabiit# "arr#o'er: If a servicemember or veteran has a 5..: disabi+ity rating by the ;e(artment of
Veterans ffairs, that status shou+d automatica++y carryover to their (rofi+e within the &;) To reEuire
recertification of an individua+%s disabi+ity rating is shamefu+, causes unnecessary (a(erwork and may
a+so resu+t in inaccuracies)
8) Aggregated &oan Data: 4resent+y +oan data is difficu+t to manage and is rare+y avai+ab+e in a sing+e view
un+ess conso+idated) The GSC%s M&T&7R 4rogram wou+d enab+e this aggregated view of +oans for free,
but is being he+d u( in the ;e(artment of &ducation) SV recommends that this body com(e+ &; to
authoriHe the (rogram to access ;irect $oan data to enab+e a++ students to be ab+e to benefit from
M&T&7R)
?) +rogram "oordination: Many (rograms e'ist to su((ort +oan re(ayment of student +oans, though very
few of these (rograms have coordinated inter,(rogram re+ationshi(s) ma,or opportunit# e'ists if current
(rograms were coordinated and stream+ined to function seam+ess+y) n e'am(+e of this wou+d be to better
coordinate the ;o; State $oan Re(ayment 4rograms !S$R4" and the 4ub+ic Service $oan 3orgiveness
!4$S3") If servicemembers and veterans cou+d a((+y the 4$S3 as Eua+ifying (ayments, +oans wou+d be
significant+y more manageab+e) 4utting the (ieces of this (uHH+e together wou+d be an im(ortant ste(
forward)
These recommendations are humb+y submitted to the members of this subcommittee and re(resent obvious ga(s
in current +aw that have common,sense so+utions) SV +ooks forward to working with the members of this body
55
dditiona+ a+ternatives to +oan conso+idation are a+so worth considering for those with +ower +eve+s of debt) D7, -..6, #s 3edera+
Costs of $oan Conso+idation Rise, 7ther 7(tions Shou+d Be &'amined*, htt(:==www)gao)gov=assets=-8.=-<.889)(df
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to deve+o( and enact such necessary measures)
O$% F*',- T10$21()
2ith the right too+s and resources in (+ace, SV sees no +imit to what our servicemembers and veterans can
achieve in higher education and beyond) 2hen em(owered with environmenta+ factors for success, the investment
merica has made in the DI Bi++ and its veterans becomes an even c+earer asset to our economy) By reducing the
debt burden on servicemembers and veterans, we can set our veterans u( for +ong,term success)

2e thank the Chairman, Ranking Member, and the subcommittee members for your time, attention, and devotion
to the cause of veterans in higher education) s a+ways, we we+come your feedback and Euestions, and we +ook
forward to continuing to work with this subcommittee, the Senate Committee on Banking, Aousing, and 0rban
ffairs, and the Congress to ensure the success of a++ generations of veterans through education)
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