The Departments of Education and Justice, and the Federal Deposit Insurance Corporation are cracking down on shady lending practices.
The organizations recently revealed that there will be a settlement against student loan servicers Sallie Mae and Navient for overcharging military members. The lenders have also been accused of charging excessive fees.
The Wall Street Journal reports Sallie Mae and Navient have agreed to pay a total $97 million in an effort to settle charges that they violated the Servicemembers Civil Relief Act (SCRA), which caps loan interest rates at 6% for active duty military members.
The Justice Department settlement is requiring the lenders to pay $60 million in refunds, in addition to a $55,000 civil penalty. The FDIC settlement is requiring a refund of $30 million and penalties totaling $6.6 million.
It has been alleged that 60,000 service members were charged hundreds of dollars in excessive interest charges. In addition, the government says the lenders also inflated late fees.
Said Sallie Mae in a written statement: “Sallie Mae Bank is in the process of implementing these new SCRA policies, procedures and training, has updated billing statement disclosures, and is taking additional steps to ensure its third-party service providers are also fully compliant in these regards.â€