Thursday, May 28, 2015

Nearly 78,000 Service Members to Begin Receiving $60 Million for Sallie Mae Student Loans Overcharges

Nearly 78,000 Service Members to Begin Receiving $60 Million for Sallie Mae Student Loans Overcharges

Posted by CotoBlogzz

Rancho Santa Margarita, CA -  The Department of Justice announced today that this June, 77,795 service members will begin receiving $60 million in compensation for having been charged excess interest on their student loans by Navient Corp., the student loan servicer formerly part of Sallie Mae.  

The payments are required by a settlement that the department reached with Navient last year to resolve the federal government’s lawsuit filed against owners and servicers of student loans for violating the rights of service members eligible for benefits and protections under the Servicemembers Civil Relief Act (SCRA).  
The complaint in that lawsuit alleged that three defendants (collectively Navient) engaged in a nationwide pattern or practice, dating as far back as 2005, of violating the SCRA by failing to provide members of the military the 6 percent interest rate cap to which they were entitled for loans that were incurred before the military service began.  The three defendants are Navient Solutions Inc. (formerly known as Sallie Mae, Inc.), Navient DE Corporation (formerly known as SLM DE Corporation), and Sallie Mae Bank.
The settlement covers the entire portfolio of student loans serviced by, or on behalf of, Navient.  This includes private student loans, Direct Department of Education Loans, and student loans that originated under the Federal Family Education Loan (FFEL) Program.  Approximately 74 percent of the $60 million that is about to be distributed is attributable to private loans, 21 percent to loans guaranteed by the Department of Education and five percent to loans owned by the Department of Education.
The checks, which are scheduled to be mailed on June 12, 2015, will range from $10 to over $100,000, with an average of about $771.  Check amounts will depend on how long the interest rate exceeded 6 percent and by how much, and on the types of military documentation the service member provided.
In addition to the $60 million in compensation, the settlement contains several other key provisions.  It required Navient to pay the United States a civil penalty of $55,000.  Navient must also request that all three major credit bureaus delete negative credit history entries caused by the interest rate overcharges and improper default judgments.
The settlement also required Navient to streamline the process by which service members may notify Navient of their eligibility for SCRA benefits.  The revised process includes an SCRA online intake form for service members, and the availability of customer service representatives specially trained on the rights of those in military service.  
The DOJ investigation of Navient was the result of a referral of service member complaints from the Consumer Financial Protection Bureau’s Office of Servicemember Affairs, headed by Holly Petraeus.  
The Department of Education is now using a U.S. Department of Defense database to proactively identify borrowers who may be eligible for the lower interest rate under the SCRA, rather than requiring service members to apply for the benefit.
Beginning on June 12, service members with questions about their eligibility for monetary relief under the settlement should call (855) 382-6421.  
Other service members and their dependents who believe that their SCRA rights have been violated should contact an Armed Forces Legal Assistance office.  
To find the closest office, consult the military legal assistance office locator at and click on the Legal Services Locator.  

No comments: