DELAWARE — The federal government reached a settlement with the owners and those servicing student loans who were violating the rights of service members by not capping military loans at 6 percent interest.
The three defendants — Sallie Mae Inc, now known as Navient Solutions Inc, and SLM DE Corp., now known as Navient DE Corp and Sallie Mae Bank. — allegedly engaged in this nationwide practice going back to 2005, which violated the Service Members Civil Relief Act, officials stated.
The U.S. Justice Department’s proposed settlement will require Sallie Mae to pay $60 million to compensate service members for the alleged Civil Relief Act violations, officials said.
About 60,000 service members will receive compensation under the settlement.
The settlement is pending approval in that court.
“Federal law protects our servicemembers from having to repay loans under terms that are unaffordable or unfair,” said Attorney General Eric Holder. “That is the least we owe our brave service members who make such great sacrifices for us. But as alleged, the student lender Sallie Mae sidestepped this requirement by charging excessive rates to borrowers who filed documents proving they were members of the U.S. military.”
Holder said the message in this civil action is that this conduct is “inappropriate, inexcusable” and will not be tolerated.