An estimated 78,000 military service members are expected to receive much-needed financial relief after being charged excess interest on their student loans.
There’s a reason people say we need to do more for our servicemen and women.
The U.S. Department of Justice published news that close to 78,000 military service members were overcharged in student loan interest. This is the federal government’s first time filing a lawsuit against student loan providers for violating the right to benefits.
It was able to reach a $60 million settlement last year with the Navient Corporation, formerly known as Sallie Mae. Payments are expected to go out June 12 to 77,795 service members, and average $771.
“We are pleased about how quickly we will be able to get this money back into the hands of the service members who were overcharged on their student loans while they were in military service,” said Vanita Gupta, principal deputy assistant attorney general of the Civil Rights Division. “The department will continue to actively protect our service members and their families from such unjust actions.”
Under the Servicemembers Civil Relief Act, military service members entering active duty have protection against issues regarding certain interest rates, income tax payments, health insurance and judicial proceedings, among other areas. In its lawsuit against Navient, the Department of Justice filed a complaint alleging the student loan provider failed to provide military members with their entitled 6 percent interest rate cap. It also determined the illegal actions (SCRA is federal law) date back to 2005.
“The Department of Justice will continue using every tool at our disposal to protect the men and women who serve in the Armed Forces from unjust actions and illegal burdens,” notes Stuart F. Delery, acting associate attorney general.
In addition to paying the $60 million settlement, Navient must also pay the United States a $55,000 civil penalty for its actions, as well as contact each of the three major credit bureaus to delete any negative impact on service members’ credit related to its interest rate overcharges.
From the sound of things, the process of streamlining SCRA benefits is being updated. The Department of Education has stepped in to work alongside the Department of Justice in efforts to prevent something like this from happening again. It is using a database from the U.S. Department of Defense to identify qualifying borrowers eligible for a reduced interest rate under the Servicemembers Civil Relief Act. This will help remove the need for individual service members to apply for benefits. Navient is also required to streamline its process going forward.
Those who sacrifice so much to serve this country deserve better treatment. While there’s an endless list of ways we need to better provide for them, at least this is a step in the right direction.