Student Loans: Oversight of Servicemembers' Interest Rate Cap Could Be Strengthened
Published: 2016-11-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: SCRA helps servicemembers financially by capping interest rates on student loans during active duty. As of May 2016, about 1.3 million servicemembers were on active duty. The number of active duty servicemembers with student loans is unknown, as is the number eligible for the rate cap who may not have received it. GAO was asked to review implementation of the rate cap for servicemembers' student loans.
This report examines: (1) the number of servicemembers who received the cap for student loans (2) challenges that servicemembers face in doing so, and (3) the extent to which federal agencies oversee implementation of the cap. GAO analyzed data from 2008 through 2015 from the 10 federal student loan servicers; reviewed relevant federal laws, regulations, policies, and training materials; and interviewed representatives of the servicers and servicemember advocacy groups, and officials from DOD, Education, the CFPB and DOJ.
section_title: What GAO Found
paragraphs: The Servicemembers Civil Relief Act (SCRA) provides servicemembers with an interest rate cap of 6 percent on student loans while they are on active duty. The number of servicemembers with federal student loans who received this rate cap increased as a result of the Department of Education (Education) requiring federal loan servicers to regularly use the Department of Defense's (DOD) SCRA website to identify eligible servicemembers and automatically apply the rate cap without requiring servicemembers to provide written notice of active duty (see figure). Using the automated process, some federal loan servicers identified borrowers who had been eligible for the rate cap as far back as 2008, when the SCRA rate cap first applied to federal loans, and retroactively applied the cap.
Servicemembers can face challenges obtaining the SCRA rate cap due to their failure to receive accurate information. Federal internal control standards state that agencies should externally communicate the information necessary to achieve their objectives. However, some servicemembers eligible for the cap may not receive it because information used by DOD to inform them about the cap is inaccurate: for example, some DOD information states that the rate cap does not apply to student loans. In addition, because the automated process to identify eligible servicemembers is not required for private student loans, servicemembers with private loans may be particularly at risk of not receiving the accurate information needed to obtain the cap themselves.
While Education monitors the application of the SCRA cap for federally owned or guaranteed student loans, there is a gap in oversight for private student loans. The Consumer Financial Protection Bureau (CFPB), four federal financial regulators of banks, and the Department of Justice (DOJ) each oversees aspects of private student loans or SCRA, but none has the authority to routinely oversee SCRA compliance at nonbank entities that handle private student loans. These nonbank entities include institutions of higher education and private companies. The resulting gap in oversight of SCRA compliance for these nonbank entities that make or service private student loans increases the risk that servicemembers will not receive a benefit for which they are eligible.
section_title: What GAO Recommends
paragraphs: GAO is making four recommendations, including that DOD improve the accuracy of SCRA information on student loans, and that CFPB and DOJ collaborate to ensure routine oversight of nonbank lenders and servicers, and seek additional authority, if needed. DOD disagreed and said it already provides accurate information. DOJ agreed and CFPB did not specifically agree, but said that all eligible servicemembers should receive the cap. GAO maintains that DOD's outreach materials are not always accurate and that routine oversight is necessary for nonbank lenders and servicers.

section_title: Letter
paragraphs: The Servicemembers Civil Relief Act (SCRA) provides, among other  benefits, a cap of 6 percent on the interest rate of previously incurred  debt, including student loan debt. The benefit is provided during periods  of active military service. As of May 2016, there were about 1.3 million  servicemembers in active periods of military service. Although the number  of servicemembers with student loans is unknown, there have been  indications that those with student loans who are eligible for an interest  rate of 6 percent were not always receiving this benefit. Specifically, the  Department of Justice (DOJ) in 2014 reached a $60 million settlement  with one of the largest servicers of federal student loans for alleged  violations of the SCRA interest rate cap that affected almost 78,000  servicemembers. Subsequent reports of possible violations raise  questions as to whether other servicemembers may not have been  receiving a benefit for which they are eligible.
The Ranking Member of the Senate Committee on Homeland Security  and Governmental Affairs requested that GAO examine issues related to  implementation of the SCRA interest rate cap for student loans. This  report answers the following questions: (1) How many servicemembers  have received the SCRA interest rate cap for their student loans; (2) what  challenges do servicemembers face obtaining the cap; and (3) to what  extent do federal agencies oversee implementation of the cap?
To describe how many servicemembers have received the SCRA interest  rate cap on their federally-owned and guaranteed student loans, we  reviewed aggregate data from the Department of Education’s (Education)  National Student Loan Data System and analyzed record-level data from  the 10 federal student loan servicers—the companies contracted to  service loans owned by Education during the period of our review—for  the period October 2008 (the beginning of the first full fiscal year that  SCRA was applied to student loans owned by Education) through  December 2015 (the most recent available data). We also reviewed  aggregate data from six private student lenders, who together accounted  for about two-thirds of outstanding private student loan debt as of March  31, 2016. These data included the number of private student loans,  borrowers, and outstanding loan balances overall and for those receiving  the SCRA cap, as of September 30, 2014, September 30, 2015,  December 31, 2015, and March 31, 2016 (the most recent available  data). We determined these data to be sufficiently reliable for the  purposes of this report by reviewing information about the data and  interviewing knowledgeable officials.
To identify challenges servicemembers face obtaining the cap, and  whether the challenges differ for those with private student loans, we  interviewed officials from advocacy groups that represent veterans and  servicemembers. We also conducted semi-structured interviews with  representatives of the 10 federal loan servicers and spoke with officials  from the Department of Defense (DOD)—whose secretaries for each  military branch are responsible for informing servicemembers about their  SCRA benefits. In addition, we reviewed relevant agency publications,  including outreach materials used to inform servicemembers about the  cap, and compared this information to the current requirements for the  SCRA interest rate cap on student loans. To determine how federal  agencies, including Education, the Consumer Financial Protection Bureau  (CFPB), and DOJ, oversee implementation of the SCRA interest rate cap,  we interviewed agency officials, reviewed relevant federal laws and  regulations, and policies, procedures, and guidance on the cap, and  assessed whether there are any gaps in overseeing the SCRA rate cap  for student loans, using a federal framework for assessing effective  regulatory systems. (See appendix I for additional detail on scope and  methodology.)
We conducted this audit from May 2015 through November 2016, in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Servicemembers Civil Relief Act (SCRA), enacted in 2003 as a  modernized version of the Soldiers’ and Sailors’ Civil Relief Act of 1940,  provides protections for servicemembers to help them meet the unique  circumstances they face when serving their country. SCRA provides  protections to active-duty servicemembers in the event that their military  service prevents them from meeting financial obligations. The act  provides mortgage-related protections, including prohibiting foreclosures  on active-duty servicemembers’ homes without court orders. In addition,  the act provides protections for other types of debt, such as credit cards  and vehicle and student loans. During periods of active military service,  the act caps interest rates and fees at 6 percent for debt incurred prior to  active duty.
subsections: section_title: Interest Rate Cap under SCRA
paragraphs: The interest rate cap covers full-time members of the Army, Navy, Air  Force, Marine Corps, and Coast Guard, as well as Reservists, National  Guard members, commissioned National Oceanic and Atmospheric  Administration officers, and commissioned Public Health Service officers,  while they are on active duty. For the purpose of the 6 percent interest  rate cap, “interest” is defined to include service charges, renewal charges,  fees, or any other charges with respect to an obligation or liability. Any  such interest above the 6 percent rate—whether it has yet accrued—is  permanently forgiven, and the monthly payment amount going forward  must be reduced by the amount of interest forgiven allocable to the period  for which payment is made. The interest rate cap has applied to private  student loans since 1942 under a provision of the Soldiers’ and Sailors’  Civil Relief Act of 1940, and to federally owned and guaranteed loans  since the 2008 reauthorization and amendment of the Higher Education  Act of 1965 (HEA). During 2008-2016, interest rates for student loans  owned by Education ranged between 3.4 and 7.9 percent, with rates  above 6 percent in every year for at least some of these loans, while the  most common interest rate for loans guaranteed, but not owned by  Education was 6.8 percent, ranging from 5.6 to 8.5 percent. Available  data for private student loans show that fixed interest rates charged by 9  major lenders ranged from about 3 to 19 percent, with an average starting  interest rate of 7.8 percent (see appendix I for additional information on  student loan interest rates).
section_title: Student Loans and Student Loan Servicers
paragraphs: Student loans play a crucial role in ensuring access to higher education  for millions of students, and three types of student loans are or have been  available through governmental and private sources: federal loans,  commercial Federal Family Education Loans (FFEL), and private loans  (see table 1).
Student loan servicers are banks that service loans they make or  nonbanks contracted to handle billing and repayments, inform borrowers  about repayment options, and respond to customer inquiries. As of  December 31, 2015, Education had contracts with 10 companies to  service federal student loans, and all of these companies also service  commercial FFEL loans. No new FFEL loans have been made since  2010, but there is about $350.2 billion in outstanding FFEL loans. FFEL  loans were originated by private or state entities, but Education has  owned some of these loans since 2008 (referred to as federal loans in  this report). Those that are still owned by private and state entities are  often referred to as commercial FFEL loans (referred to as commercial  FFEL loans in this report). The 10 companies that serviced federal loans  as of December 2015, also each service some private student loans,  which are student loans that are not owned or guaranteed by Education.
section_title: Identifying Servicemembers Eligible for the Interest Rate Cap on Their Student Loans
paragraphs: The SCRA interest rate cap applies to federal, commercial FFEL, and  private student loans as long as at least one party to the loan is a  servicemember with qualifying military service. Historically, as provided  in SCRA, servicemembers had to contact their student loan servicer(s)  and provide written notice and proof of an active-duty start date. The  loan servicer would apply the cap to any loans that were (a) disbursed  prior to active military service, and (b) had an interest rate above 6  percent. However, Education has since implemented new contract  requirements for federal student loan servicers to automatically identify  eligible servicemembers by matching their borrower files against DOD’s  SCRA website to obtain information on active military service. The match  identifies servicemembers who are starting active duty, in order for  servicers to apply the cap and also those who come off active duty, in  order for servicers to remove the cap. Since 2014, student loan servicers  have had to match their files for borrowers with federal student loans  against DOD’s SCRA website on a monthly basis to determine which  borrowers have military service that qualifies them for the cap for federal  student loans, and for what periods of time (we will refer to this process  as the automatic eligibility check in this report). Education also issued  regulations requiring the servicers of commercial FFEL loans to  implement the automatic eligibility check as of July 1, 2016. As a result,  written notice from servicemembers for the cap is no longer needed for  federal or commercial FFEL loans, although servicemembers can still  apply in writing. The automatic eligibility check is not required for private  student loans (see table 2).
The SCRA website can be used by anyone who inputs a borrower’s  identifying information to match DOD’s information on a servicemember’s  periods of active military service. Users can submit one name for a  match, or do batch matches for up to 250,000 names at one time, and the  website should provide results within 24 hours, according to DOD.  Servicers also have to notify each servicemember who receives the cap  within 30 days and retain a record of the SCRA website match in the  servicemember’s file (see fig. 1).
section_title: Federal Oversight for Student Loans and for Administering the SCRA Interest Rate Cap
paragraphs: DOD, Education, CFPB, and DOJ each play a role in overseeing  servicemembers’ student loans. DOD, Education, and DOJ also have  roles with respect to SCRA’s interest rate cap for servicemembers’  student loans. Under SCRA, the DOD secretaries of each military branch  have primary responsibility for ensuring that servicemembers receive  notification of and information on their SCRA benefits, including for  student loans. In addition, DOD maintains the SCRA website, which is  considered the official source of servicemembers’ active-duty status for  complying with SCRA. Education’s Office of Federal Student Aid  administers federal student aid programs, including loans, and oversees  the performance of contracted student loan servicers that handle billing  and other administrative tasks. It also has some responsibility for  monitoring commercial FFEL student loan servicers since the loans are  federally guaranteed.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank Act) established CFPB and provided it with authority to supervise  certain student loan lenders and servicers with respect to the enumerated  federal consumer financial laws as defined by the Dodd-Frank Act.  Specific to student loans, CFPB also collects borrower complaints about  private student loans and has an internal focus, through its Ombudsman  and Office of Servicemember Affairs, on issues affecting private student  loan borrowers, including servicemembers and their families. However,  because SCRA is not included in the enumerated federal consumer  financial laws transferred to CFPB for oversight, the bureau does not  have specific oversight of SCRA compliance for private student loan  lenders and servicers.
The four federal financial regulators for banks—Federal Deposit  Insurance Corporation, Board of Governors of the Federal Reserve  System, National Credit Union Administration, and the Office of the  Comptroller of the Currency—oversee SCRA compliance in connection  with student loan lending and servicing by banks, credit unions,  institution-affiliated parties as defined in the Federal Deposit Insurance  Act, and in certain instances third-party service providers under the Bank  Service Company Act. DOJ has the specific authority to enforce SCRA  and accepts referrals from other federal agencies, including CFPB, for  possible SCRA violations.
section_title: Number of Servicemembers Who Received the SCRA Interest Rate Cap on Student Loans Has Increased
subsections: section_title: Number of Servicemembers with Federal Student Loans Who Received the Rate Cap Increased Dramatically with Automatic Eligibility Checks
paragraphs: The number of servicemembers with federal student loans who received  the SCRA interest rate cap increased dramatically when Education  required servicers of these loans to use an automated process to identify  qualifying servicemembers and apply the cap to their eligible loans. In  particular, Education in 2014 required that federal loan servicers use the  SCRA website each month to identify borrowers with qualifying periods of  active military service and automatically apply the rate cap to their eligible  federal loans, rather than requiring servicemembers to provide written  notice of eligibility. When some federal loan servicers began using the  SCRA website, they identified servicemembers with active military service  start dates as early as 2008, when the SCRA rate cap first applied to  federal loans. These servicers then applied the cap to servicemembers’  eligible federal loans retroactively for those qualifying periods of service.  As a result, some servicemembers were eligible to receive the rate cap  for months going forward and also retroactively for months in which they  were previously eligible. Recently, in response to findings from a report  issued by Education’s Office of Inspector General, the agency required  federal loan servicers to identify all servicemembers with qualifying  military service back to August 2008, including those that were not  identified in the initial website checks, and automatically apply the interest  rate cap retroactively to their eligible federal loans by December 2016.
Data from the federal loan servicers show that the number of  servicemembers who received the SCRA interest rate cap on their federal  student loans for December 2015 was dramatically higher than for  October 2008, with the increase driven by federal loan servicers using the  SCRA website to identify qualifying servicemembers and automatically  apply the cap to their eligible federal loans (see fig. 2). (For additional  information on servicemembers who received the cap, see appendix II.)
The sidebar illustrates the potential financial impact of the interest rate  cap on an individual servicemember’s federal student loan.
Some of the servicers had sought to implement the automatic website  checks earlier. For instance, in June 2011, four trade associations  representing student loan servicers jointly requested permission from  Education to conduct SCRA website eligibility checks. Education denied  the request, stating that the act specifically required servicemembers to  apply in writing for the rate cap. Then DOJ, in its 2014 settlement with a  federal loan servicer for potential violations, interpreted SCRA as allowing  the servicer to use the SCRA website to confirm borrowers’ eligibility and  to ascertain active-duty begin and end dates. Education officials said  because SCRA is under DOJ’s enforcement jurisdiction, they deferred to  DOJ’s decision to allow the servicers to use the SCRA website.
section_title: Number of Servicemembers with Commercial FFEL Loans Who Received the Rate Cap Increased with Early Implementation of Automatic Eligibility Checks
paragraphs: The number of servicemembers with commercial FFEL loans who  received the SCRA interest rate cap also increased after most federal  student loan servicers began using the SCRA website to automatically  identify borrowers with active military service qualifying them for the rate  cap and apply it to their eligible commercial FFEL loans. Loan servicers  were not required to use the website checks for commercial FFEL loans  until July 1, 2016, and could instead require written notice from  servicemembers until that date. But Education authorized and  encouraged servicers to use the automatic website checks for  commercial FFEL loans when it required them for federal student loans in  2014. When some federal loan servicers began using the SCRA  website for borrowers with commercial FFEL loans, they identified  servicemembers with active military service start dates as early as 2008,  when the SCRA rate cap first applied to commercial FFEL loans, and  applied the cap retroactively for those qualifying periods of service. As a  result, some servicemembers were eligible to receive the rate cap on a  commercial FFEL loan for months going forward and also retroactively for  months in which they were previously eligible.
According to data from the federal loan servicers, who serviced at least  77 percent of the outstanding balance of commercial FFEL loans as of  December 31, 2015, the number of servicemembers who received the  SCRA interest rate cap on their commercial FFEL loans for December  2015 was much higher than the number who received the cap for October  2008, with the increase mostly driven by federal loan servicers using the  SCRA website to identify qualifying servicemembers and automatically  apply the cap to their eligible commercial FFEL loans (see fig. 3). (For  additional information on servicemembers who received the cap, see  appendix II.) Data were not readily available on the remaining share of  the commercial FFEL market serviced by non-federal loan servicers. In  addition, the number of outstanding commercial FFEL loans decreased  from 2008 to 2015, primarily due to the termination of Education’s  authority to make or insure FFEL loans, effective July 1, 2010.
section_title: Number of Servicemembers with Private Loans Who Received the Rate Cap Also Increased
paragraphs: Although the automatic eligibility check for the SCRA interest rate cap is  not required for private student loans, the number of servicemembers  who received the cap on at least one of their private loans increased for 6  lenders who have voluntarily implemented automatic SCRA website  checks. The number of servicemembers who received the cap on at least  one of their private student loans more than doubled, from 14,970 to  33,309 from September 2014 to March 2016, according to data from 6  lenders who together accounted for 65 percent of the private student loan  market. According to the 6 lenders, the servicers they use for their  private student loans all began voluntarily using the SCRA website to  check for eligible servicemembers as of June 2015. Because limited  data are available on loan servicing for the private student loan market  not covered by the 6 lenders (about 35 percent), it is unclear how many  servicemembers are receiving the cap for any private loans handled by  the other servicers.
section_title: Servicemembers Face Challenges Obtaining the SCRA Interest Rate Cap for Student Loans
subsections: section_title: Servicemembers Receive Inaccurate Information about the Cap
paragraphs: Consumer information provided to servicemembers about the SCRA  interest rate cap is sometimes inaccurate. Under SCRA, the military  branch secretaries have primary responsibility for ensuring that  servicemembers receive pertinent information on their SCRA benefits.  However, a key source of information for servicemembers, DOD’s Military  OneSource website, incorrectly states that the SCRA cap does not apply  to commercial FFEL student loans incurred prior to active military service.  Further, DOD provided us with 8 documents it uses to inform  servicemembers, military legal aid attorneys, officials who examine  financial institutions, and others about servicemembers’ SCRA benefits.  Our review of these documents, prepared by various offices and  branches within DOD, found that all contained significant inaccuracies.  For example, 6 of the 8 documents specify that the servicemember must  provide written notice to obtain the cap and provide military orders, and 3  of those 6 say that the request must be made within 180 days of the end  of military service—requirements that no longer apply to federal or  commercial FFEL loans. In addition, 2 of the 8 documents specifically  state that the SCRA rate cap does not apply to student loans. Inaccurate  information could be especially problematic for servicemembers with  private student loans because, unlike for federal and commercial FFEL  loans, servicers of private student loans are not required to automatically  identify and apply the cap to borrowers’ eligible loans.
In acknowledging these inaccuracies, DOD officials told us that the  department needs to work across functional areas and military  installations to ensure that DOD information on the SCRA rate cap is  correct and uniform for all servicemembers. DOD recently combined  many of its financial readiness initiatives under one office, which officials  said they expect to result in more accurate and consistent SCRA  materials across military installations, but the effect of this consolidation is  not yet known. Federal internal control standards state that agencies  should externally communicate the information necessary to achieve their  objectives, but inaccurate information about the SCRA rate cap not only  falls short of those standards, it may also prevent some servicemembers  who have private student loans from receiving a benefit for which they are  eligible.
section_title: Eligible Servicemembers Are at Risk of Not Receiving the Rate Cap for Some Private Student Loans
paragraphs: There is a risk that not all servicemembers who are eligible for the SCRA  interest rate cap are receiving it on their private student loans for several  reasons. First, the automatic eligibility check is not required for private  loans, so the extent to which the rate cap is being applied to  servicemembers’ private student loans is unknown. The private student  loan market comprised approximately $102 billion in student loans, about  7.6 percent of the total student loan market, as of March 31, 2016. The 6  lenders of private student loans for whom we received data are voluntarily  identifying eligible servicemembers and providing the rate cap through the  automatic eligibility check. Our analysis of data from these 6 lenders  showed that the number of borrowers receiving the SCRA rate cap on  private student loans more than doubled once these servicers started  using the automated process. These lenders’ loans represent about 65  percent of the private student loan market, or about $66 billion as of  March 2016. Information on the remaining 35 percent of the private  student loan market, or about $36 billion as of March 2016, was not  available with regard to whether the lenders or servicers use the  automated process.
Second, representatives from the four veteran service organizations we  spoke with told us that the SCRA interest rate cap is not well publicized  and that many servicemembers are not aware of the benefit. One  representative said that while implementation of the automatic eligibility  checks has been relatively smooth for federal and commercial FFEL  loans, it has caused confusion because of the different requirement to  obtain the same rate cap for private loans. Although SCRA states that  during active military service the interest rate of a servicemember’s debt  shall not exceed 6 percent, those servicemembers with private student  loans are at risk of not receiving the cap if they do not know how to obtain  it and their loan servicer does not automatically apply it.
There are also indications that private student loans may be more  susceptible to SCRA rate cap violations than other types of loans. In  DOJ’s 2014 settlement with one of the federal student loan servicers,  nearly three-fourths of DOJ’s settlement of borrower claims—about $45  million—went to borrowers with private student loans, while just one- fourth went to servicemembers with federal loans or commercial FFEL  loans. In 2015, Education, the CFPB, and the Department of the  Treasury issued a joint policy stating that common student loan servicing  functions should be consistent for all student loans. However, without a  requirement that loan servicers automatically identify eligible  servicemembers and apply the interest rate cap for private student loans,  servicemembers with private loans may not be receiving the interest rate  cap for which they are eligible in a manner consistent with those who  have federal and commercial FFEL loans.
DOJ has proposed changes to SCRA’s statutory language to explicitly  allow a servicemember’s oral rather than written notice of eligibility to  obtain the interest rate cap. Additionally, the proposal would eliminate  the provision that servicemembers provide the creditor a copy of their  military orders. While these changes, if enacted, would remove the  burden on servicemembers with private loans of having to provide written  notice of their military status, they would still need to be aware of the cap  and orally provide notice of their status to their loan servicer. Alternatively,  requiring the automatic eligibility check for private student loans would  better ensure that all servicemembers with private student loans are  receiving a benefit for which they are eligible and that the interest rate cap  is applied consistently across all types of student loans.
section_title: Federal Agencies Use Various Mechanisms to Oversee Application of the Interest Rate Cap for Student Loans, but Limitations Exist
subsections: section_title: Education Oversees Application of the Rate Cap for Federal Loans and Commercial FFEL Loans, but Lacks a Systematic Way to Track Complaints
paragraphs: Education, as part of its oversight of federal student loan servicers, uses  a variety of mechanisms to oversee how servicers apply the SCRA  interest rate cap for federal student loans and commercial FFEL loans  held by eligible servicemembers. However, Education does not  systematically track SCRA-specific borrower complaints.
subsections: section_title: Education’s SCRA Oversight Mechanisms
paragraphs: Education has established several mechanisms to oversee whether  federal student loan servicers are properly applying and removing the rate  cap for federal and commercial FFEL student loans:
Reviews of federal loan servicers: In February 2015, Education  indicated it created a loan servicer monitoring group of 10 monitors  and 1 supervisor to oversee servicing activity for federal student  loans. This group reviews borrower accounts, and implementation of  the SCRA rate cap is one of its core functions. The first set of reviews  in 2015 found that 332 of the 335 borrower accounts reviewed had  correctly processed rate caps under the automatic eligibility check,  according to the review reports. Servicers did not correctly process 3  accounts: in 2 cases borrowers were not notified that their rate had  been reduced, and in 1 case the rate reduction was applied  retroactively to a date prior to when the loan was eligible for the cap.  The second set of reviews was completed in April 2016, and the  review reports show that all 300 reviewed borrower accounts had the  rate cap properly applied, had correct beginning and end dates (if  applicable), and had borrowers who were notified about application of  the cap.
Data reporting: Federal student loan servicers provide Education with  monthly reports of all federal student loan borrowers who fall into a  “Service Members category,” which includes servicemembers who are  SCRA eligible. In addition, servicers report weekly to Education the  date they applied the rate cap for each servicemember who is  receiving the cap, the date the cap was ended, and the date the  servicemember was notified of the cap. Education is using this  information to track the number of borrowers who have military  service qualifying them for the rate cap.
Technical assistance for loan servicers: In early 2015, when working  with loan servicers to implement the automatic eligibility check for  federal loans, Education hosted conference calls with the servicers  and reached out to DOD for clarification when needed.  Representatives of 7 of the 10 federal student loan servicers said  such calls were useful, and two also noted that they also have a  liaison at Education whom they can contact about questions or  challenges. According to Education officials, the agency is continuing  to provide technical assistance on the website match, such as working  on updated guidance for servicers to help resolve non-matches due to  marital or hyphenated last names. In addition, Education officials  explained that staff listen to a sample of incoming and outgoing calls  between servicers and servicemember borrowers, to ensure accuracy  and completeness of provided information. Feedback is provided to  servicers through meetings and a written report, and servicers make  required changes or provide employee training to correct deficiencies,  Education officials said.
Agency-wide oversight board: Education has an internal board  comprised of staff from different units and groups within Education’s  Office of Federal Student Aid (e.g., Chief Financial Officer, Program  Compliance Staff) that has met periodically since 2012 to coordinate  loan servicer monitoring activities. The agenda for the October 2014  monthly meeting included implementation of the automatic eligibility  check for federal loans.
Program compliance reviews: Education included implementation of  the automatic eligibility check as part of its review of the loan servicers  that had an annual compliance review scheduled in 2015 or 2016 to  look at how the federal student loan servicers were implementing the  revised automatic eligibility check. In the three review reports  provided to GAO, one servicer did not properly apply the SCRA rate  cap for a reservist who had been called to active duty military service.  No other SCRA-related issues were identified for these three  servicers in the reports.
section_title: Education’s Process for Tracking Student Loan Complaints
paragraphs: In addition to these efforts, Education tracks and resolves borrower  complaints about federal and commercial FFEL student loans it receives  directly, but does not track the number of SCRA-specific complaints.  Education officials said they generally receive complaints from borrowers  who believe their issue was not satisfactorily resolved by a servicer or  who are reluctant to submit a complaint to a servicer. Until July 1, 2016,  Education recorded borrower complaint information through a dozen  different systems within the agency, including the Ombudsman’s  complaint tracking system and the Office of Program Compliance’s  Complaint Tracking System. While borrowers could contact Education  with SCRA-related complaints, officials said the agency did not  specifically track the number of SCRA complaints it received across all its  complaint systems.
In March 2015, the President signed a Student Aid Bill of Rights which  required Education by July 1, 2016 to develop and implement a simple  process for borrowers to file complaints and for Education to track their  resolution. The agency completed design of the new system and started  using it in July 2016. While the system is designed to generate more  robust, standardized information on borrower complaints, Education  officials said it does not systematically track SCRA-related complaints.
Under the new system, when complainants enter their contact information  online, they can choose to self-identify as “a servicemember or veteran”  using a check box, as appropriate, but this is an optional data field. There  are also two options in a drop-down menu categorizing complaint type  that Education officials said are appropriate for SCRA-related complaints:  “Military and Veteran Benefits” and “Loan Interest Rate,” but neither is  specific to SCRA complaints. In addition, there is a blank text box in  which complainants could opt to specify that their issue is SCRA related.  Education officials said they could determine the volume of SCRA  complaints by running a report on complaints with “SCRA” in the text box.  However, this approach relies on borrowers to enter SCRA in the text  box. Also, not all servicemembers may know how to refer to the rate cap  benefit by its actual name or acronym.
While Education has taken steps to improve and streamline how it tracks  borrower complaints, without a way to systematically identify SCRA- related complaints Education will not be able to evaluate the effectiveness  of its efforts to oversee these benefits or be able to use this information to  improve service to borrowers who are servicemembers. For example, the  agency will not know if the frequency of SCRA complaints for commercial  FFEL loans decreased as servicers implemented the automatic eligibility  check for these loans. In addition, federal internal control standards state  that an agency’s management should analyze and discuss information  related to achieving agency goals. One of Education’s strategic  objectives is to provide superior service and information to borrowers, and  not having information on the extent of SCRA-related complaints can  hinder the agency’s ability to provide this level of customer service. In  addition, Education has identified having a unified borrower complaint  tracking system as a key mechanism to enhance oversight and customer  service. However, Education will not be able to fully respond to  servicemembers’ SCRA-related issues without knowing details about or  frequency of these types of complaints.
section_title: Defined Roles of Multiple Agencies Leave a Gap in SCRA Oversight
paragraphs: The current roles of CFPB, the four federal financial regulators, and DOJ  with regard to SCRA compliance result in an oversight gap because no  agency is currently authorized to routinely oversees SCRA compliance for  private student loans made or serviced by nonbank lenders and servicers  (see fig. 4). By routine oversight, we are referring to onsite reviews to  specifically look for instances of noncompliance with SCRA by nonbank  private student loan lenders and servicers. Nonbank lenders include  institutions of higher education and private companies that are not banks.  According to CFPB, the nonbank student loan servicers include the seven  largest student loan servicers. While the proportion of private student  loans that are made or serviced by nonbanks is unknown, as of March  2016, the total private student loan market had an outstanding balance of  about $102 billion, and available data show that interest rates on such  loans can range from about 3 to 19 percent. While Education routinely  monitors the application of the SCRA cap for federal and commercial  FFEL loans, it does not do so for any private loans serviced by these  companies.
As part of its oversight responsibility, CFPB collects borrowers’ student  loan complaints and reports on issues facing private student loan  borrowers, including military borrowers, through its Ombudsman and  Office of Servicemember Affairs. CFPB also oversees the student loan  lending and servicing operations of large banks and their affiliates (large  bank lenders and servicers), nonbanks that make private student loans  (nonbank lenders), and certain large nonbank student loan servicers  (nonbank servicers) for compliance with certain federal consumer  financial laws, through onsite examinations. However, because SCRA is  not one of the federal consumer financial laws whose oversight was  transferred to CFPB, the bureau does not have the authority to routinely  oversee SCRA compliance by student loan lenders and servicers, and  does not inspect SCRA compliance during its onsite reviews.
The four federal financial regulators—Federal Deposit Insurance  Corporation, Board of Governors of the Federal Reserve System,  National Credit Union Administration, and Office of the Comptroller of the  Currency—have broad authority to review the banking activities of  regulated entities’—insured depository institutions, credit unions, and their  affiliates—including compliance with certain applicable laws, such as  SCRA. According to agency officials, they also have enforcement  authority over institution-affiliated parties, and in certain instances, over  third-party service providers, including reviewing compliance with the  SCRA rate cap for student loans.  However, the regulators do not have  the authority to routinely oversee whether nonbank student loan lenders  or servicers comply with the SCRA rate cap for private student loans.
DOJ has specific authority to enforce SCRA based on referrals of  possible violations, but does not conduct onsite reviews of student loan  lenders or servicers to check for SCRA compliance, including lenders and  servicers of private student loans. According to DOJ officials, they ask  servicemembers to first go through DOD’s military legal assistance  system to resolve SCRA complaints, including those concerning private  student loans. If the military system is unable to resolve the complaint, it  is referred to DOJ, which may open a formal investigation and/or file a  lawsuit. However, referrals from DOD would only capture cases in which  a servicemember knew about the rate cap for private student loans and  believed that it had been erroneously denied. Currently, because of the  statutorily defined roles of each agency, no agency can routinely  oversees SCRA compliance by certain nonbank private student loan  lenders and servicers by, for example, conducting onsite file reviews.  Because of this, there is a risk that SCRA violations for private student  loans will go undetected, potentially leaving some servicemembers  without a benefit for which they are eligible.
While CFPB has written agreements in place with the four federal  financial regulators and with DOJ for interagency coordination related to  oversight, these agreements do not provide for routine SCRA oversight  for private loans connected with nonbank lenders and servicers. This may  be because none of these agencies currently has the authority to  routinely oversee SCRA compliance at nonbank private student loan  lenders and servicers. Because CFPB, the federal financial regulators,  and DOJ each have a role in the oversight of either private student loans  or the SCRA rate cap, any of these agencies could potentially be in a  position to assume responsibility for the oversight of SCRA compliance by  nonbank private student loan lenders and servicers. However, additional  statutory changes may be required to give these, or any other agencies,  additional authority to conduct routine oversight of SCRA compliance at  nonbank private student loan lenders and servicers. CFPB and DOJ  could communicate this need to the Congress.
In prior work, we developed a framework for crafting and assessing an  effective financial regulatory system that stated such systems should be  appropriately comprehensive, and cover all activities that pose risks to  consumer protection, including closing any gaps in oversight. The lack  of routine oversight of nonbank private student loan lenders and servicers  related to SCRA compliance increases the risk that some  servicemembers will not receive a benefit for which they are eligible, even  though SCRA was designed to provide financial protection for all active- duty servicemembers.
section_title: Conclusions
paragraphs: The number of servicemembers receiving the SCRA interest rate cap for  their federal and commercial FFEL student loans has greatly increased  since student loan servicers began using an automatic eligibility check to  identify those who are eligible. Nonetheless, some servicemembers  continue to face challenges in obtaining the cap. They receive inaccurate  SCRA information from DOD. In addition, if servicemembers have private  student loans, their loan servicer is not required to use the automatic  eligibility check to identify them. As a result, servicemembers are at risk of  not always getting the rate cap benefit for which they are eligible. If DOJ  were to update its proposed SCRA changes by requiring private loan  servicers to use the automatic eligibility check to identify eligible  borrowers, this could lead to legislative action that would provide  consistent treatment for all eligible servicemembers regardless of type of  student loan.
Education’s new borrower complaint system simplifies the complaint  process for consumers, but lacks the ability to track SCRA complaints  systematically. Without a systematic way to track complaints about the  rate cap, Education will not be certain whether servicemembers continue  to experience problems, making it difficult for Education to meet its  strategic goal of providing superior service. Oversight of compliance with  SCRA is also dispersed across multiple agencies, each of which has  limitations on its authority. Consequently, there is no routine oversight of  SCRA compliance for nonbank private student loan lenders and  servicers. The resulting lack of routine oversight for nonbank lenders and  servicers increases the risk that SCRA violations for private student loans  will go undetected and that some servicemembers may not benefit from  the rate cap for which they are eligible.
section_title: Recommendations for Executive Action
paragraphs: 1.  To help ensure quality information is conveyed to servicemembers  about how the Servicemembers Civil Relief Act (SCRA) interest rate  cap applies to student loans, we recommend the Secretary of  Defense direct the secretaries of each service branch, and work with  other secretaries as appropriate, to ensure that all information about  the SCRA interest rate cap for student loans is accurate when  provided to servicemembers and to those who work with  servicemembers to help them obtain SCRA benefits, including  information contained in outreach materials.  2.  To ensure that all eligible servicemembers with student loans receive  the SCRA interest rate cap, we recommend the Attorney General  direct the Department of Justice to consider modifying its proposed  changes to SCRA to require use of the automatic eligibility check for  private student loans.  3.  To enhance customer service, we recommend the Secretary of  Education direct the Office of Federal Student Aid to identify ways to  modify the data collected in its unified borrower complaint system to  allow the agency to more precisely identify and analyze complaints  specifically about the SCRA interest rate cap.  4.  To better ensure that servicemembers with private student loans  benefit from the SCRA interest rate cap, we recommend that the  Director of the Consumer Financial Protection Bureau and the  Attorney General of the Department of Justice coordinate with each  other, and with the four federal financial regulators, as appropriate, to  determine the best way to ensure routine oversight of SCRA  compliance for all nonbank private student loan lenders and servicers.  If CFPB and DOJ determine that additional statutory authority is  needed to facilitate such oversight, CFPB and DOJ should develop a  legislative proposal for Congress.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft copy of this report to DOD, Education, CFPB, DOJ,  and the four federal financial regulators for review and comment. We also  provided relevant report sections to the federal student loan servicers and  the private-sector company representing the 6 private lenders, for  technical comments. DOD’s comments are reproduced in appendix III,  Education’s in appendix IV, CFPB’s in appendix V, and DOJ’s are in  appendix VI. Of the four federal financial regulators, the National Credit  Union Administration provided formal comments, which are reproduced in  appendix VII, while the other three other regulators provided technical  comments. We incorporated technical comments in the report as  appropriate.
In its written comments, DOD disagreed with our recommendation, saying  it was unnecessary because the department was already providing  accurate information about the SCRA interest rate cap for student loans.  DOD said that information provided in 6 of the 8 documents GAO  reviewed is accurately based on statute whereas Education’s updated  requirement to automatically apply the cap is based on policy which could  change in the future. Moreover, the automated process applies only to  federal and commercial FFEL student loans in contrast to other types of  debt. DOD said that providing information based on statute rather than  policy would cause less confusion and was a better approach than what  we recommend. With regard to Education’s automated process, we note  that Education formalized this approach through federal regulations that  became effective as of July 2016, which currently legally requires  servicers to use this process for all federal and commercial FFEL loans.  In addition, DOD said it was unable to verify whether DOD’s Military  OneSource website still inaccurately states that the SCRA rate cap does  not apply to commercial FFEL loans. However, when we searched the  website using the term “SCRA,” we still found this inaccuracy as of  October 26, 2016. DOD said it would look into a means of verifying  website information, but in the meantime, it is satisfied that its training  provides correct information. Given that Military OneSource is a key  source of information for servicemembers and that, as we note in this  report, 2 of the 8 documents DOD provided state that the SCRA rate cap  does not apply to student loans, we continue to believe that  servicemembers are not always receiving accurate and up-to-date  information about how the SCRA rate cap applies to student loans.
In its written comments, Education said it is committed to accurately  tracking the types of complaints it receives. While Education believes its  new feedback system and monitoring efforts allow it to identify SCRA- related issues by conducting keyword searches using a variety of terms,  the agency said that it will respond to GAO’s recommendation by creating  a complaint subcategory specifically for SCRA under the “Military and  Veterans Benefits” category. Education added that it had not previously  created a specific complaint category for SCRA given that military  members may be unfamiliar with the term. We share Education’s concern  in ensuring complaints are captured regardless of whether the service  member has knowledge of the SCRA term. However, as we point out in  this report, one of the challenges with Education’s keyword search  process is that it may miss relevant loan complaints where SCRA is not  specifically mentioned. In implementing our recommendation by creating  a subcategory for SCRA complaints, we encourage Education to use  simple language to describe what an SCRA complaint is, rather than rely  on the servicemember’s knowledge of the acronym. We believe doing so  would help servicemembers note concerns related to their student loan  interest charges and active duty status, and allow Education to  appropriately capture this information and resolve any issues.
In its written comments, CFPB did not specifically agree or disagree with  our recommendation to provide oversight of SCRA compliance among  nonbank private lenders and servicers, but acknowledged that it shares  GAO’s interest in maximizing SCRA protections. CFPB said that while it  will continue its strong collaboration with relevant federal agencies,  existing interagency agreements could not be used to coordinate  oversight of SCRA compliance because these agreements would not  create the statutory authority CFPB would need to oversee SCRA. Based  on CFPB’s comments, we modified the recommendation by removing the  suggestion that oversight could be accomplished by updating interagency  coordination agreements. Although CFPB does not currently have  authority over nonbank lenders and servicers, the bureau said it has other  tools at its disposal, including sharing information with other agencies  about SCRA-related complaints or possible violations. We believe,  however, that referring complaints does not take the place of regular  oversight and that CFPB and DOJ can take additional steps toward that  end. We therefore encourage both agencies to work together to  determine the best way to ensure routine oversight of SCRA compliance  for all nonbank private student loan lenders and servicers, and to  consider developing a legislative proposal seeking additional statutory  authority, as needed, should they determine that step to be necessary.
In its written comments, DOJ neither agreed nor disagreed with our  second recommendation and agreed with our fourth recommendation.
With respect to requiring use of the automatic eligibility check for  private student loans, DOJ said that its current package of proposed  legislative changes provides benefits to servicemembers with all kinds  of loans, including private student loans. Rather than requiring  servicemembers to submit written notice and a copy of military orders,  they need only give oral or written notice of eligibility for the cap to  their creditors. However, as we stated in the report, servicemembers  with private student loans would still need to be aware of the rate cap  in order to give notice, whether written or oral. Therefore, we  encourage DOJ to consider updating its current proposal to require  use of the automatic eligibility check by all student loan lenders and  servicers. Not only would this ensure that servicemembers with  private student loans receive a benefit for which they are eligible, but  also that the interest rate cap is applied consistently across all types  of student loans.
With respect to coordinating oversight with CFPB, and the four federal  financial regulators, as appropriate, DOJ agreed with this  recommendation and believes the agency is in full compliance;  therefore they believe the recommendation should be closed. DOJ  said the agency already coordinates extensively with CFPB and the  financial regulators concerning SCRA compliance, through such  mechanisms as referrals from CFPB for any SCRA-related violations  and access to its consumer complaint database, and that it will  continue to build upon them. While these mechanisms are  commendable, we believe they do not constitute exercising routine  oversight of nonbank private student loan lenders and servicers who  are not affiliated with a depository institution. Therefore, we cannot  close the recommendation as DOJ suggests. We believe that  additional interagency coordination, including working with CFPB to  seek additional statutory authority, as needed, is necessary to ensure  routine SCRA compliance.
In its written comments on our fourth recommendation, the National  Credit Union Administration (NCUA), one of the four federal financial  regulators, agreed that additional interagency coordination around SCRA  compliance for private student loans would be useful, especially for  certain third-party service providers who may lend money for or service  private student loans.  NCUA noted that it does not currently have  authority to provide routine oversight of SCRA compliance by these  entities.
In its technical comments, the Federal Deposit Insurance Corporation  proposed that GAO delete the fourth recommendation. In their view,  oversight of nonbank private student loan lenders and servicers cannot  be accomplished by updating existing interagency agreements since the  agency lacks statutory authority to oversee these entities. As noted  earlier, we modified the recommendation accordingly to address a similar  comment received from CFPB. We underscore the need for CFPB and  DOJ to work together to ensure the routine oversight of SCRA  compliance for all nonbank student loan lenders and servicers, which they  may determine requires them to seek additional statutory authority, to  ensure that all eligible servicemembers receive the interest rate cap for  their private student loans.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, Secretary of Education, Director of  the Consumer Financial Protection Bureau, Attorney General of the  United States, Chairman of the Federal Deposit Insurance Corporation,  Chair of the Board of Governors of the Federal Reserve System,  Chairman of the National Credit Union Administration, Comptroller of the  Currency, and to other interested parties. In addition, the report will be  available at no charge on GAO’s website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (617) 788-0534 or emreyarrasm@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix VIII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report examines: (1) How many servicemembers have received the  Servicemembers Civil Relief Act (SCRA) interest rate cap for their student  loans? (2) what challenges do servicemembers face obtaining the cap?  and (3) to what extent do federal agencies oversee implementation of the  cap?
We used multiple methodologies to conduct this study. To obtain  information on servicemembers receiving the SCRA cap, we used data  from the 10 federal student loan servicers, the Department of Education  (Education), and six private student lenders. To identify challenges  servicemembers face obtaining the cap and assess the extent to which  federal agencies oversee implementation of the rate cap, we interviewed  officials and reviewed documentation from the Department of Defense  (DOD), Education, the Consumer Financial Protection Bureau (CFPB),  and the Department of Justice (DOJ). We also interviewed  representatives of the 10 student loan servicers who are contracted by  Education to service federal student loans, from four advocacy groups  that represent servicemembers, and from one trade group representing  servicers. In addition, we reviewed relevant federal laws and regulations.  We used the above methodologies and a review of federal internal control  standards and standards for assessing financial regulatory systems, as  well as Education’s strategic objectives to determine whether the  information provided to servicemembers about the SCRA rate cap is  accurate, whether the challenges faced by servicemembers are different  for those with private student loans, whether Education tracks SCRA- specific complaints, and whether there are any gaps in the oversight of  the SCRA interest rate cap for student loans.
We conducted this audit from May 2015 through November 2016, in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Analysis and Review of Data
paragraphs: To describe how many servicemembers received the SCRA interest rate  cap on their student loans, we analyzed record-level data from the 10  federal student loan servicers—the companies contracted to service  loans owned by Education—on borrowers with federal loans or  commercial Federal Family Education Loans (FFEL) for the period  October 2008 (the beginning of the first full fiscal year that SCRA was  applied to student loans owned by Education) through December 2015  (the most recent available data). The 10 federal loan servicers as of  December 31, 2015, were: Cornerstone, EdFinancial, Granite State,  Great Lakes, Missouri Higher Education Loan Authority, Navient, Nelnet,  Oklahoma Student Loan Authority Servicing, Pennsylvania Higher  Education Assistance Agency/FedLoan, and the Vermont Student  Assistance Corporation Federal Loans. Specifically, for borrowers who  received the cap on at least one of their loans, we analyzed data provided  by the 10 loan servicers to determine (1) whether the cap was applied on  the basis of a written notification of eligibility from the servicemember or  on the automatic eligibility check; (2) the type of loan (i.e., federal or  commercial FFEL); (3) the duration of the cap; (4) loan interest rates prior  to borrowers receiving the cap; and (5) loan disbursement amounts. We  also used these analyses to examine how the SCRA interest rate cap  may affect total loan costs for servicemembers.
We also reviewed the interest rates for federal, commercial FFEL, and  private student loans from 2008 to 2016, to make sure that interest rates  were over 6 percent for each type of loan during at least some of the  period of time covered by our review (see tables 3 and 4).
We reviewed aggregate data from Education’s National Student Loan  Data System on the number of borrowers with federal loans who were  receiving the SCRA cap as of October 1, 2014, October 1, 2015, and  December 31, 2015, and compared these data to the data we received  from the 10 federal loan servicers. In addition, we reviewed aggregate  data on the total number of federal and commercial FFEL loans open  each year, from fiscal year 2009 through the first quarter of fiscal year  2016, and the outstanding balance of commercial FFEL loans as of  December 31, 2015 to describe the size of the commercial FFEL loan  market. We also reviewed information provided by Education on loan  transfer rates between servicers to determine the extent to which loan  transfers occur. Because some loans were transferred between servicers  during our review’s time frame, our numbers may include duplicate counts  for borrowers who had the cap applied by more than one servicer.  According to data from Education’s National Student Loan Data System,  2 percent of federal loans were transferred in fiscal year 2009 and 5  percent were transferred in fiscal year 2015. In addition, 12 percent of  commercial FFEL loans were transferred between servicers in fiscal year  2009 and 3 percent were transferred in fiscal year 2015.
With regard to private student loans, we reviewed aggregate data from 6  private student lenders, who together accounted for 65 percent of  outstanding private student loan debt as of March 31, 2016, via  MeasureOne, a private-sector company representing the lenders. The 6  lenders are: Citizens Bank, N.A.; Discover Bank; Navient; PNC Bank,  N.A.; Sallie Mae Bank; and Wells Fargo Bank, N.A. Specifically, we  reviewed aggregate data on the number of private student loans,  borrowers, and outstanding loan balances serviced by these servicers  overall, and for those receiving the SCRA cap, as of September 30, 2014,  September 30, 2015, December 31, 2015, and March 31, 2016 (the most  recent available data). Because 2014 was when Education required that  federal loan servicers use the automatic eligibility checks for federal  student loans on a monthly basis, we collected data from the end of fiscal  years 2014 and 2015, and for each quarter after the end of 2015, from the  private loan servicers to see if the number of borrowers receiving the cap  for private loans was also increasing over this period of time. We also  asked these servicers whether they implemented the automatic eligibility  check for the private loans they service over this time frame, and if so,  when they first began using it and how often they use it to identify eligible  servicemembers.
We determined that data from each of these sources were sufficiently  reliable for the purposes of this report by electronically testing the data for  missing data, outliers, and errors; by reviewing existing information about  the data and the systems that produced them; and by interviewing  knowledgeable loan servicer and Education officials, as appropriate. In  the case of the private student loan data, we sent data reliability  questions for the 6 lenders to MeasureOne, who forwarded them to the  lenders. MeasureOne then collected the lenders’ written responses and  forwarded them to us.
section_title: Interviews
paragraphs: To learn how the 10 federal student loan servicers identify and work with  eligible servicemembers to apply the interest rate cap and about any  related challenges, we conducted semi-structured interviews between  October 2015 and January 2016 with representatives of the federal  student loan servicers who together serviced all federal student loans as  of December 31, 2015. We also interviewed an official with the National  Council of Higher Education Resources—one of four trade associations  whose membership includes student loan servicing companies—about  their attempt in 2011 to obtain permission from Education to use the  SCRA website to obtain active-duty dates. This group also participates in  the Student Loan Ombudsman’s Caucus. To identify challenges  servicemembers face obtaining the cap, we spoke with officials from  DOD, Education, and CFPB, and with representatives of four advocacy  groups that were selected to provide representation of both currently  active servicemembers and veterans, and based on suggestions from  agency officials and experts in this area: American Legion, Military  Officers Association of America, Student Veterans of America, and  Military.com. We also interviewed Education, CFPB, and DOJ officials to  clarify the role of each agency with respect to overseeing implementation  of the SCRA interest rate cap for student loans.
section_title: Review of Federal Laws, Regulations, and Other Relevant Documentation
paragraphs: To determine how the federal loan servicers are supposed to be applying  the cap for eligible borrowers and how Education, CFPB, and DOJ  oversee implementation of the SCRA interest rate cap, we reviewed  relevant federal laws and regulations, and policies, procedures, and  guidance for the cap, as well as Education’s contracts with and  monitoring plans for the federal student loan servicers. To learn about the  challenges servicemembers face in obtaining the SCRA cap, we reviewed  complaints submitted to CFPB by servicemembers and reports from  CFPB that discuss such challenges. To identify possible challenges  servicemembers encounter concerning the cap, we also reviewed  relevant agency publications and websites, including materials used by  DOD and Education to inform servicemembers about the cap. Finally, we  reviewed documentation, such as memoranda of understanding, related  to interagency coordination concerning the cap, including the Joint  Statement of Principles on Student Loan Servicing issued jointly by  Education, CFPB, and the Department of the Treasury in September  2015.
section_title: Appendix II: Additional Data from Federal Loan Servicers and Private Lenders
subsections: section_title: Received automatically via SCRA website 58
paragraphs: Total  275  1,042  1,771  2,821  3,644  4,466  5,383  6,527  7,447  8,349  9,469  10,518  11,320  12,029  12,672  13,497  14,483  15,203  16,107  17,760  18,107  18,108  18,126  18,317  18,005  17,975  18,103  18,271  18,319  17,562  6.8  $12,000  180,939  (47%)  240,582  620  (1%)
section_title: Total
section_title: Total
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: Comments from the Department of Education
section_title: Appendix V: Comments from the Consumer Financial Protection Bureau
section_title: Appendix VI: Comments from the Department of Justice
section_title: Appendix VII: Comments from the Prudential Financial Regulators
section_title: Appendix VIII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact mentioned above, the following staff members  made significant contributions to this report: Meeta Engle (Assistant  Director), Jennifer McDonald (Analyst-in-Charge), Jeffrey G. Miller, and  Jill Yost. Additional assistance was provided by Susan Aschoff, James  Bennett, Mark Bird, Deborah Bland, Jessica Botsford, Brian Egger,  Lawrence Evans, Brenda Farrell, Cody Goebel, Cynthia Grant, Kirsten  Lauber, Sheila McCoy, John Mingus, Barbara Steel-Lowney, Michelle St.  Pierre, Nicholas L. Weeks, Adam Wendel, and Rebecca Woiwode.
section_title: Related GAO Products
paragraphs: Federal Student Loans: Education Could Improve Direct Loan Program  Customer Service and Oversight. GAO-16-523. Washington, D.C.: May  16, 2016.
Financial Regulation: Complex and Fragmented Structure Could Be  Streamlined to Improve Effectiveness. GAO-16-175. Washington, D.C.:  February 25, 2016.
Federal Student Loans: Key Weaknesses Limit Education’s Management  of Contractors.GAO-16-196T. Washington, D.C.: November 18, 2015.
Federal Student Loans: Education Could Do More to Help Ensure  Borrowers Are Aware of Repayment and Forgiveness Options.  GAO-15-663. Washington, D.C.: August 25, 2015.
Higher Education: Better Management of Federal Grant and Loan  Forgiveness Programs for Teachers Needed to Improve Participant  Outcomes. GAO-15-314. Washington, D.C.: February 24, 2015.
Standards for Internal Control in the Federal Government.  GAO/AIMD-00-21.3.1. Washington, D.C.: November 1999.
Federal Student Loans: Better Oversight Could Improve Defaulted Loan  Rehabilitation. GAO-14-256. Washington, D.C.: March 6, 2014.
Servicemembers Civil Relief Act: Information on Mortgage Protections  and Related Education Efforts. GAO-14-221. Washington, D.C.: January  28, 2014.
Mortgage Foreclosures: Regulatory Oversight of Compliance with  Servicemembers Civil Relief Act Has Been Limited. GAO-12-700.  Washington, D.C.: July 17, 2012.
Financial Regulation: A Framework for Crafting and Assessing Proposals  to Modernize the Outdated U.S. Financial Regulatory System.  GAO-09-216.Washington, D.C.: January 8, 2009.