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DOJ Announces Student Loan Refunds to Servicemembers

Marine Money

The Department of Justice has announced that in June 77,795 service members will begin receiving $60 million in refunds on interest they were illegally charged on student loans.

Navient Corporation, the student loan servicer formerly known as Sallie Mae, or the Student Loan Marketing Association, agreed to the payment as part of a settlement last year with the government to resolve a lawsuit filed under the Servicemembers Civil Relief Act (SCRA)

The goverment alleged that 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% interest rate cap to which they were entitled for loans that were incurred before the military service began". 

The SCRA limits the interest rate on loans taken out before joining the military or activation, to 6%.

The settlement includes private student loans, Direct Department of Education Loans, and student loans that originated under the Federal Family Education Loan (FFEL) Program. 

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% and by how much, and on the types of military documentation the service member provided.

Other provisions of the lawsuit direct Navient to request that all 3 major credit bureaus delete negative credit history entries caused by the interest rate overcharges and improper default judgments, and require Navient to streamline the process by which service members may notify Navient of their SCRA eligibility.  The revised process includes an SCRA website to allow service members to report their military status to student loan lenders online, and the availability of customer service representatives specially trained on the rights of those in military service.  

“This compensation will provide much deserved financial relief to the nearly 78,000 men and women who were forced to pay more for their student loans than is required under the Servicemembers Civil Relief Act,” said Acting Associate Attorney General Stuart F. Delery.  “The Department of Justice will continue using every tool at our disposal to protect the men and women who serve in the Armed Forces from unjust actions and illegal burdens.”

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.  Check out our Free Legal Assistance page for more information.

Related Topics

Adult Education SCRA
 
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