NEW YORK (MainStreet) — U.S. military personnel with student loans continue to suffer at the hands of their loan servicers, who botch payment processing and erroneously put loans into collection, according to a report released on Tuesday by the Consumer Financial Protection Bureau.

"Overseas & Underserved: Student Loan Servicing and the Cost to Our Men and Women in Uniform” highlights the servicers’ continued mistakes, resulting in improper denials of legal benefits and shoddy follow-through on protections for military families.

Complaints include the disgust and outrage expressed by grieving parents seeking to discharge a co-signed student loan following the death of their child in the line of duty.

"We continue to receive complaints from military student loan borrowers detailing a range of breakdowns and roadblocks,” said CFPB Director Richard Cordray. “Our deployed servicemembers should be able to focus on their military mission and spend precious free time talking with loved ones, not wrangling over problems with student loan servicers.” 

There are already federal laws on the books that give GIs protection from student loan debt. The Servicemembers Civil Relief Act (SCRA) includes special loan deferment options, such as the Department of Defense Student Loan Repayment Programs and loan forgiveness on certain federal loans through public service occupations.Smelling a business opportunity, the CFPB said some private student lenders advertise pay-for-play services that offer loan discharges, military loan deferments, and other protections for military families. This advice and information is available from the U.S. government free of charge.

The CFPB has been on bivouac here before. Its 2012 report "The Next Front? Student Loan Servicing and the Cost to Our Men and Women in Uniform" outlined obstacles encountered by enlisted personnel. Since that report, the CFPB has handled more than 1,300 complaints drawn from some 78,000 identified by the Department of Justice.

Today GIs are still struggle to get SCRA protections--like the 6% interest rate cap on loans, a substantial benefit, especially when rates on private loans creep toward double digits. The report spells out the way servicers fail to process SCRA-related requests in a timely manner and fail to convey information about the application process. Active-duty servicemembers have had their loans sent to collection due to errors by the servicer, not the borrower. These snafus can have a ripple effect, leading to unexpected delinquencies, defaults and other credit score busting consequences.

Veterans often sustain wounds that are so severe that they qualify for loan discharge. Mark Kantrowitz, senior vice president and publisher of, said, “Complaints concerning the difficulties in qualifying for a total and permanent disability loan discharge are not limited to servicemembers.” The CFPB’s student loan ombudsman Seth Frotman described the loan servicing problems faced by enlisted personnel as “the canary in the coal mine” that heralds problems in the broader civilian student loan market.

Kantrowitz recommends that servicemembers file student loan paperwork with Nelnet, which runs the website for the federal government, rather than with the loan servicer.