Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Sallie Mae and Justice Department reach $60M settlement over student loans to service members

FILE - This April 17, 2014 file photo shows Attorney General Eric Holder speaking in Overland Park, Kansas. Student lender Sallie Mae has reached a $60 million settlement with the federal government to resolve allegations it charged military service members excessive interest rates on their student loans. The settlement was announced Tuesday Holder and Education Secretary Arne Duncan. (AP Photo/Orlin Wagner, File)

Enlarge Image

FILE - This April 17, 2014 file photo shows Attorney General Eric Holder speaking in Overland Park, Kansas. Student lender Sallie Mae has reached a $60 million settlement with the federal government to resolve allegations it charged military service members excessive interest rates on their student loans. The settlement was announced Tuesday Holder and Education Secretary Arne Duncan. (AP Photo/Orlin Wagner, File)

WASHINGTON - Student lender Sallie Mae has reached a $60 million settlement with the Justice Department to resolve allegations that it charged members of the military excessive interest rates on their student loans, the federal government announced Tuesday.

The deal settles a government lawsuit that asserted the student loan giant violated the rights of service members by imposing interest rates above the 6 per cent permitted by federal law and by improperly seeking default judgments against them. Separately, the Federal Deposit Insurance Corp. announced a settlement of $30 million in restitution arising from allegations that the company maximized consumer late fee charges, as well as $6.6 million in civil penalties.

The lawsuit was the Justice Department's first against owners and servicers of student loans for violating rights of service members. The settlement has been filed in federal court in Delaware and is awaiting a judge's approval.

"We are sending a clear message to all lenders and servicers who would deprive our service members of the basic benefits and protections to which they are entitled: this type of conduct is more than just inappropriate; it is inexcusable," Attorney General Eric Holder said at a news conference. "And it will not be tolerated."

Education Secretary Arne Duncan said all students who have taken out federal loans "should have the peace of mind" that they will be treated fairly. He also said he has requested a review into whether Sallie Mae violated its contact with the Education Department through the overcharging practices.

Federal officials estimate that roughly 60,000 service members will be eligible for compensation as part of the settlement.

Sallie Mae spun off its loan servicing operation on April 30 into a separate entity known as Navient Corp.

"We offer our sincere apologies to the servicemen and servicewomen who were affected by our processing errors and thus did not receive the full benefits they deserve," Navient president and CEO John Remondi said in a statement. He said the company has made changes to "prevent these mistakes from happening again."

As part of the deal, Sallie Mae would also be required to ask the three major credit bureaus to delete negative credit histories resulting from the overcharges. The company has also agreed to streamline the process by which active duty service members can go about receiving loans.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Sudden Surge: Flood of 2014
Opportunity Magazine — The Bakken
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates