The act  provides mortgage-related protections, including prohibiting foreclosures  on active-duty servicemembers’ homes without court orders. 1). Number of Servicemembers Who Received the SCRA Interest Rate Cap on Student Loans Has Increased

		Number of Servicemembers with Federal Student Loans Who Received the Rate Cap Increased Dramatically with Automatic Eligibility Checks

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. 3). (For  additional information on servicemembers who received the cap, see  appendix II.) 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. Eligible Servicemembers Are at Risk of Not Receiving the Rate Cap for Some Private Student Loans

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. Federal Agencies Use Various Mechanisms to Oversee Application of the Interest Rate Cap for Student Loans, but Limitations Exist

		Education Oversees Application of the Rate Cap for Federal Loans and Commercial FFEL Loans, but Lacks a Systematic Way to Track Complaints

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. Nonbank lenders include  institutions of higher education and private companies that are not banks. 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. CFPB and DOJ  could communicate this need to the Congress. 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. 3. 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. 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. (2) what challenges do servicemembers face obtaining the cap? 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). In addition, we reviewed relevant federal laws and regulations. Servicemembers Civil Relief Act: Information on Mortgage Protections  and Related Education Efforts.
Why GAO Did This Study

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.

What GAO Found

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.

What GAO Recommends

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.