Study: U.S. troops face fight paying off student loans

WASHINGTON (CNN) - Despite federal programs aimed at helping members of the U.S. military with their student loan debt, many troops are having trouble paying off those obligations.

A government report released on Thursday said a complex and sometimes incomplete and inconsistent process frustrates borrowers and can hinder repayment.

The report by the Consumer Financial Protection Bureau is based largely on complaints and input from military borrowers at dozens of town halls and forums nationwide.

According to the National Center for Education Statistics, the average cumulative student loan debt for active-duty military personnel graduating from college in 2008 was $25,566.

Congress has enacted laws and initiated programs to help service personnel fulfill their financial commitments, but the report said the two million men and women serving in the armed forces need better access to clear information about debt management.

Some plans are already in place to help out troops.

Federal law allows an interest rate reduction for those who acquired student loan debt before they went on active duty. Another program is designed to reduce monthly payments based on income and family size.

Other programs offer loan deferrals, principal reduction options on certain loans for service in hostile areas, and loan forgiveness on certain federal loans for public service.

According to the consumer protection bureau report, troops say they routinely receive incomplete or inaccurate information from loan servicers, which often results in choosing less favorable repayment plans and potentially paying thousands of dollars in excess debt over the life of the loan.

In addition, many service members told the agency that they have difficulty navigating the system because the various programs apply inconsistent standards for awarding benefits.

In some cases, laws and rules apply only to federal loans. Other times, benefits have specific eligibility requirements or conditions attached.

Some require loan consolidation that might exclude borrowers from other protections. And other options vary greatly depending on the private student loan lender.

Even when troops in debt navigate the maze of options, they often face roadblocks when they try to get their benefits, the report said.

For example, the consumer watchdog created from the 2007-08 credit crisis says some military borrowers, including those in combat zones, have been denied interest rate protections because they failed to resubmit unnecessary paperwork.

In response to these problems, the consumer agency said it is trying to help service members and their families with two new initiatives.

One, a new web-based tool called, "Student Debt Repayment Assistant," is designed to help them better understand student loan repayment options and make sense of the costs and risks that accompany each choice.

Another, "Know Before You Owe," is a joint project with the Department of Education. It is aimed at helping students understand the debt implications of their college choice. Soon, all schools participating in the Department of Defense Tuition Assistance program will be required to use a "financial aid shopping sheet" modeled after this project, the consumer protection agency said.