The U.S. Department of Justice announced last week that nearly 78,000 servicemembers will begin to receive $60 million in compensation for overcharged student loans. The payments will range from $10 to $100,000, with the average check about $771, the agency said in a press release.
According to federal prosecutors, tens of thousands of service men and woman were charged excess interest on their student loans by Navient Corp., the student loan servicer formerly part of Sallie Mae.
Navient will fund the payments as part of a settlement reached last year to resolve charges that it violated the rights of service members eligible for benefits and protections under the Servicemembers Civil Relief Act (SCRA). The lawsuit claimed that the company failed 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.
In addition to the $60 million in compensation, the settlement contains several other key provisions. It requires Navient to request that all three major credit bureaus delete negative credit history entries caused by the interest rate overcharges and improper default judgments. Additionally, the loan servicer must streamline the process by which service members may notify Navient of their eligibility for SCRA benefits. The revised process includes an SCRA online intake form for service members, and the availability of customer service representatives specially trained on the rights of those in military service.
Navient denied any wrongdoing as part of the settlement. The government's allegations of overcharging applied to the company's private loan portfolio as well as the federal loans for which it manages payments on behalf of the Education Department, Inside Higher Ed reported.
Earlier this week, a separate Education Department review of Navient and other government-contracted loan servicers said that the companies largely followed the law when it came to giving service members the special loan benefits to which they are entitled.
Related Links
U.S. Department of Justice Press Release
http://www.justice.gov/opa/pr/nearly-78000-service-members-begin-begin-receiving-60-million-under-department-justice
Inside Higher Ed
https://www.insidehighered.com/quicktakes/2015/05/29/service-members-receive-navient-settlement-money