DOE Mulls Changes To SCRA Benefits Application

DOE Mulls Changes To SCRA Benefits Application

‘DOE Mulls Changes To SCRA Benefits Application’

In response to a recent Obama Administration initiative, the Department of Education has announced its intention to form a negotiated rulemaking committee to prepare the specifics of the proposed regulations. Among other regulatory issues being considered is a change to the way that active duty servicemembers will apply for the interest rate cap on federal student loans to which they are entitled under the SCRA.

The department is currently soliciting nominations for its rulemaking panel and will convene next year. The primary goal of the committee is to carry out President Obama's directive to offer the federal government's most generous income-based repayment program available for an additional 5 million student loan borrowers, but it will also look into establishing procedures for Federal Family Education Loan Program holder to use in order to identify active duty servicemembers.

By creating tools for military service verification, the Department of Education hopes to make easier the process through which servicemembers can apply for their SCRA student loan benefits.

Potential changes
As it stands now, servicemembers with active duty status are eligible for a six percent cap on the interest applied to their loans. To obtain these rates under the department's current regulations, however, the servicemember has to submit a written request and include a copy of his or her military orders. This old, paper-driven process ensures that some servicemembers who are eligible for the lower rate will not receive it.

As outlined in the DOE's Dear Colleague Letter Gen-14-16, the rulemaking panel will explore recent clarification indicating that borrowers can submit their requests via electronic means. The use of the Department of Defense's Defense Manpower Data Center database has also been authorized in order to help lenders check military status

Further, in the same way that the Department of Education's servicers have been directed to proactively identify eligible active duty servicemembers, FFEL lenders and lender-servicers will be encouraged to verify active military status and simply apply the lower rate. Once a borrower's status and service dates have been confirmed, loan servicers will be encouraged to act on this information in lieu of a request.

As a result of this rulemaking committee's decisions, more active duty servicemembers may find themselves with access to the lower student loan rate guaranteed to them under the SCRA. This development demonstrates the importance of student loan protections in recent U.S. society as well as the focus on protecting servicemembers' rights. 

Attorney Roy Kaufmann serves as the Director of the Servicemembers Civil Relief Act Centralized Verification Service, located in Washington, D.C. As a recognized authority on the Servicemembers Civil Relief Act, Mr. Kaufmann has published hundreds of articles and hosted many webinars. His teachings help law firms and businesses to remain compliant with the SCRA rules and regulations so as to avoid costly fines.

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