Sallie Mae Cheated Soldiers on Student Loans
Sallie Mae and its loan servicing unit have made a deal with federal authorities to resolve accusations that the nation’s top student loan company cheated active duty soldiers, as well as other borrowers that were being charged late fees. The two companies have more than doubled the amount they had set aside to cover settlements. The increase in expected cost, which could grow by the time the settlements are finalized, comes as the Department of Education is being pressured by Senate Democrats and student advocates to suspend it’s contract with Navient, Sallie Mae’s former loan servicing unit.
The Department of Justice, Federal Deposit Insurance Corp., and Consumer Financial Protection Bureau are investigating allegations that the company violated federal consumer protection laws that prohibit predatory lending, and illegally processed borrowers’ monthly payments.
Under the Service Members Civil Relief Act, loan organizations must lessen the interest rate on student loans to 6 percent or less upon request by active duty soldiers. The law extended beyond private student loans to incorporate federal student loans starting in 2008. The Justice Department just started really enforcing the law in recent years. Student loan companies have had a troublesome time conforming to it. The law declares that once a troop asks for the investment rate cap, it remains in effect for their entire term of active duty status. Troops don’t need to be in battle zones to fit the bill for the benefit.
As indicated by the CFPB, service members have alleged that student loan companies like Sallie Mae and Navient have told them they couldn’t receive benefits under this law unless their loans were in deferment or forbearance. Troops likewise have told the CFPB that their loan servicers wrongly informed them that the 6 percent investment rate expired every year, and that they were obliged to submit extra paperwork for it to remain in effect. Others were discouraged from requesting the protections provided by the law, while yet others were erroneously informed that the benefits only apply to those in combat zones. Some troops told the CFPB that they were advised to give end dates for their active duty tours, a requirements the CFPB has said is for all intents and purpose practically impossible to meet, being that officers in the military are typically not told when their tours will end.
Navient recognized that the government’s examination concerning assertions that the organization cheated troops, infringing upon the Service Members Civil Relief Act covers “all loans” it serviced from Nov. 28, 2005 up to this point. The organization administrates loans on behalf of the Department of Education, and its agreement with the DoE prohibits it from violating the law. James Runcie, COO for the Education Department’s Office of Federal Student Aid, told legislators in March that the division hadn’t discovered a “wholesale” infringement by the organization of its contract.
The student debt crisis has reached alarming levels. Student loan debt continues to cause hardships on our nation’s college graduates, topping the charts an average $29,000 per student last year.
This is bringing on financial challenges for a large number of our country’s graduates who are unable to pay back their student loans. To make matters worse, the exacerbating interest on these loans is creating a snowball effect that will make it impossible for most to ever pay off their loans. This obligation is keeping numerous Americans from owning a home, buying cars, or even beginning a family.
While we can’t assist in Sallie Mae loans, there are several government programs to assist with federal student loans and we can help determine if you might qualify for student loan forgiveness. Our team of dedicated student advocates will help reduce your monthly cost to the minimum amount possible until such a time that forgiveness may be a possibility.
We match thousands of graduates with federal programs that are offered by The Department of Education to consolidate and lower their current Federal student loans. We help you take advantage of the latest regulations put in place by Congress and President Obama and potentially save thousands of dollars. Debt is hard to ignore. When you’re staring down a ballooning credit card balance and fending off insistent phone calls from angry creditors, it can be an all-consuming enemy.