Sallie Mae agrees to $96M in settlements
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 on 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 percent permitted by federal law and by improperly seeking default judgments against them. Separately, the Federal Deposit Insurance Corp. announced a $36 million settlement arising from allegations that the company maximized consumer late fees.
The lawsuit was the Justice Department's first against owners of student loans. 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 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 about 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 agreed to streamline the process for active duty service members to receive student loans.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Met Museum of Art president to retire
- Move over, Mickey, here comes Crayola
- Girl struck by plane on beach succumbs
- Surgeon general echoes warnings about skin cancer
- Obama’s many rules often violate statute
- N.H. kidnapping suspect held on $1M bail
- Lone clinic in Miss. for abortions still stands
- UCLA inundated by burst pipe
- Swift action expected of VA’s new secretary
- Appeals court upholds nation of origin labels for meat
- Harshest sanctions yet target Russian finances, arms