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Written by: Cody Brumfield
Published: 05/25/2005 Sallie Mae Settles Lawsuit with College Loan Corporation
Student loan giant Sallie Mae has agreed to pay $14 million to competitor College Loan Corporation to avoid a second trial in a complex case involving the Higher Education Act's “single-holder rule.”
Under the rule, students who have all of their loans with a single source must consolidate with that entity. Students with loans from multiple sources may consolidate with any lender.
Sallie Mae chose to interpret the rule in a way that allowed it to claim that it and affiliated financial firms such as JP Morgan Chase & Co count as a single entity. College Loan Corporation objected and sued in 2002.
Under the terms of the settlement, no wrongdoing is admitted and Sallie Mae is not required to end the practice.
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