May 13, 2014 03:02 PM EDT
Sallie Mae Prepping to Pay $173 Million in Penalties for Alleged Borrower Violations
Sallie Mae is preparing to pay about $173 million in student loan repayment penalties, a figure that could rise by the time the settlements are completed.
According to the Huffington Post, the penalties are coming from multiple investigations from federal agencies alleging the lender violated borrowers' rights, especially those of active duty military servicemembers. The Federal Deposit Insurance Corp. (FDIC), Department of Justice and the Consumer Financial Protection Bureau (CFPB) are all conducting their own probes.
A group of democratic U.S. Senators, led by Elizabeth Warren (Mass.), has been applying pressure to the Department of Education to terminate its lucrative contract with Sallie Mae. Borrower advocates like the CFPB encourage anyone with a complaint to formally file.
The Servicemembers Civil Relief Act (SCRA) violation is the main charge against Sallie Mae and the various complaints supplement the case against the lender. Borrowers have alleged Sallie Mae intentionally applies late fees and makes it difficult to get into favorably repayment plans.
"We have always sought to administer SCRA benefits in accordance with the law's requirements and in a manner that helps eligible customers receive their benefits quickly and easily," Sallie Mae spokeswoman Martha Holler, told the HP in a statement.
Sallie Mae recently split itself into two companies and the other is called Navient, which focuses on collecting loan defaults, and both have been implicated in the accusations of borrower violations.
"We strongly support our military customers and we make it as easy as possible for service members to get the information and service they need to access their SCRA benefits," Navient spokeswoman Patricia Christel told the HP in a statement. "The majority of our dedicated military benefits team has a loved one who has served, and they are proud to assist thousands of service members each month. We look forward to resolving discussions with our regulators very soon."
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