Thousands of checks will be mailed out next month to troops who were charged excess interest on their student loans by Navient Solutions. Some the checks will amount to over $100,000.
According to The Washington Post, it has been a year since federal prosecutors hit Navient with a $60 million fine for allegedly charging members of the military more than the 6 percent interest permitted by law. Prosecutors said the company violated the Service members Civil Relief Act (SCRA), a federal law that extends legal and financial protections to military personnel.
In order to satisfy the terms of the settlement, Navient has to pay out $60 million to nearly 78,000 military members. The terms cover the entire portfolio of student loans serviced by the company, which collect and applies student loan payments to borrower debt. The loans include both those originated by private lenders and the federal government.
The amount of each check is determined by how long the interest rate exceeded the 6 percent cap. They are scheduled to be mailed out on June 12 and will range anywhere between $10 to over $100,000. The average amount of the refund checks will be around $771.
The Justice Department discovered the problems with Navient when the Consumer Financial Protection Bureau’s Office of Servicemembers Affairs reported numerous complaints received from troops about their student loans.
The Washington Post reported that according to prosecutors, Navient staff denied some borrowers’ benefit requests and stuck others with more than $500 in excess interest. When military members fell behind on payments, the company took legal action against them without documenting their military service, which is in violation of the law.
Navient has admitted no wrongdoing and its chief executive Jack Remondi said earlier this week that a recent review of Navient’s files by the Education Department is evidence that the company has been in compliance with the law. The Education Department stated it found little evidence that Navient or any of its four largest loan servicers unlawfully charging active-duty troops high interest rates on federal student loans. However, it did not look at private lender loans.
In addition to sending the refund checks to compensate troops affected by the judgment, Navient must request that the black marks caused by the interest rate overcharges be deleted by all three major credit bureaus. This includes any improper default judgments as well.
Any member of the military with questions about eligibility for compensation under the settlement can call a Justice Department hotline at (855) 382-6421 beginning June 12.