Sallie Mae To Settle Lawsuit

Service members who took out unreasonably high student loans from Sallie Mae could receive some relief, under a $90 million settlement between Delaware-based corporation and the Justice Department. In a lawsuit filed concurrently with the settlement proposal, the government contended Sallie Mae violated the Servicemembers Civil Relief Act by failing to cap interest rates on student loans at six percent. “Sallie Mae sidestepped this requirement by charging excessive rates to borrowers who filed documents proving they were members of the U.S. military,” the Justice Department said in a May 13 press release. In some instances, Sallie Mae wrongly obtained default settlements from service members who had been charged exorbitant interest rates, the Justice Department stated. “By requiring Sallie Mae to compensate its victims, we are sending a clear message to all lenders and servicers who would deprive our servicemembers of the basic benefits and protections to which they are entitled,” the Justice Department statement said. “This type of conduct is more than just inappropriate; it is inexcusable.” The settlement requires Sallie Mae to compensate its victims and direct the three major credit bureaus to expunge negative entries from credit ratings.