The U.S. Education Department released the results of a yearlong review into whether its four main federal student loan agencies (Navient, Great Lakes, PHEAA and Nelnet) overcharged service members on their direct federal student loans, reports Inside Higher Ed.
The review largely cleared the companies of wrongdoing.
Service members were improperly charged in less than 1 percent of the nearly 900 cases reviewed, reported Inside Higher Ed, and the Department does not plan to take action against the companies.
The review began last May after the Justice Department accused Navient, formerly known as Sallie Mae, of overcharging military members by not capping their interest rate at 6 percent, as required by the Servicemembers Civil Relief Act. Navient and Sallie Mae paid $97 million to settle the allegations but did not admit wrongdoing.
The department now requires its loan servicers to proactively check a Pentagon database to find out whether borrowers are on active duty and therefore eligible to have their interest capped. In addition, a rulemaking panel recently approved a new regulation that would require servicers of older government-backed loans to also conduct such checks, Inside Higher Ed reported.
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Inside Higher Ed
https://www.insidehighered.com/news/2015/05/27/education-department-review-clears-loan-companies-overcharging-military-members