Posted Date: May 13, 2014

Author:  Jana Hernandes, Service Director, Operations, Federal Student Aid

Subject: Loan Servicing Information - Sallie Mae SCRA Settlement with U.S. Department of Justice

On May 13, 2014, the Department of Justice (DOJ) announced and filed in the U.S. District Court for the District of Delaware a consent decree (or settlement) with Sallie Mae and Navient Solutions regarding possible violations of the Servicemembers Civil Relief Act (SCRA) with regard to private loans, William D. Ford Federal Direct Loan (Direct Loan) Program loans, and Federal Family Education Loan (FFEL) Program loans.  When approved by the court, as part of this settlement agreement, Sallie Mae is establishing a settlement fund to reimburse borrowers who may have been improperly denied SCRA benefits.

The Department of Education (the Department) will be initiating its own review to help ensure that our federal loan servicers are fully compliant with all provisions of the SCRA in servicing federally-owned loans.  As part of this review, the Department will determine if further actions should be taken.

Information for Affected Borrowers

We know that schools and other members of the financial aid community will receive inquiries from former student and parent borrowers about the Sallie Mae settlement fund.  Direct borrowers who inquire about the fund as follows:

  • If a borrower’s loans are serviced by Sallie Mae and the borrower believes he or she was incorrectly denied SCRA benefits, direct the borrower to the Department’s information page at StudentAid.gov/settlement.

    This StudentAid.gov page will be updated with information on how eligible servicemembers can receive reimbursement through Sallie Mae’s settlement fund.  

  • If a borrower needs more information about the benefits afforded to servicemembers under SCRA, direct the borrower to www.servicemembers.gov.

   

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