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 first ever 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 United States’ 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.
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