77K military members to receive refund after being overcharged for student loans
- Navient Corp. overcharged more than 77,000 military members on their student loans.
- $60 million in settlement payouts will be mailed to the servicemembers later this month.
Navient Corp., a former Sallie Mae-affiliated student loan servicer, will pay $60 million in settlement payouts this month after overcharging nearly 78,000 U.S. servicemen and women on their private and federal education loans.
The settlement was reached in May of last year, but the Department of Justice (DoJ) did not announce the payments until this June, Time reported.
The DoJ press release states that the payments, set to be mailed on June 12, will range from $10 to more than $100,000, and will average $771. In addition to reimbursing the military members, Navient is required to pay a $55,000 civil penalty and request negative trade lines on the students’ credit histories caused by “interest rate overcharges and improper default judgments” be expunged by the three major credit reporting agencies—Equifax, Experian, and TransUnion.
Under the Servicemembers Civil Relief Act (SCRA), members of the armed forces are granted a 6% interest cap on their student loans. In order to ensure accuracy on student loan bills in the future, the Department of Education is working with a Department of Defense database to sort qualified students to receive lower interest rates under SCRA; this, the DOJ hopes, will fix the current system that requires service members to apply themselves for the SCRA benefits.
This is the “federal government’s first ever lawsuit filed against owners and servicers of student loans” for violating SCRA benefits according to the DoJ press release.
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