Sallie Mae was ordered to pay $90 million in refunds as a result of an enforcement action by the Justice Department and the FDIC.
In one action, Navient, a company Sallie Mae spun off to handle loan servicing, has agreed to pay $60 million to settle a Justice Department suit accusing Sallie Mae of violating the Servicemembers Civil Relief Act. This requires lenders to cap interest on loans at 6% while military members are on active duty. As many as 60,000 military servicemembers could receive refunds on interest they were overcharged on private and federal college loans from 2005.
In another action FDIC ordered Sallie Mae and Navient to pay $6.6 million in penalties and $30 million in restitution to borrowers. Sallie Mae failed to disclose to borrowers with multiple loans that it applied payments to maximize late fees. The servicer also misled borrowers in how to avoid late fees.
As part of the settlement with the Justice Department, Sallie Mae must remove negative information it placed on service members' credit reports. Sallie Mae is also required to make it easier for military members to notify the servicer if they are eligible for relief under the Servicemembers Relief Act.