Legal News

Sallie Mae Settles with DOJ for $60 Million over Student Loans to Servicemen
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)

The federal government’s first lawsuit under the Servicemembers Civil Relief Act (SCRA) was settled as soon as it was filed and a milestone in justice over student loans established within a few hours and without much ado. First, the DOJ made a press release about the first lawsuit being filed on Tuesday, and then on the very same date, we had another press release gleefully announcing the settlement with Sallie Mae.

Attorney General Eric Holder said while announcing the lawsuit and settlement, “Federal law protects our servicemembers from having to repay loans under terms that are unaffordable or unfair … That is the least we owe our brave servicemembers who make such great sacrifices for us.  But as alleged, the student lender Sallie Mae sidestepped this requirement by charging excessive rates to borrowers who filed documents proving they were members of the U.S. military.”


The lawsuit had alleged that Sallie Mae had failed to provide members of the military the six percent interest rate cap to which they were entitled. The complaint further alleged that Sallie Mae Inc. and SLM DE Corporation also violated the law by improperly obtaining default judgments against servicemembers.

The proposal for settlement of the lawsuit had been filed along with it, requiring Sallie Mae to pay $60 million in compensation to servicemembers for the alleged violations of the law. According to department estimates, about 60,000 servicemembers will receive compensation under the settlement. While the settlement is pending approval in the U.S. District Court for the District of Delaware, there is little doubt that it will work out to the satisfaction of all concerned, the way such high legal drama usually plays out.

The settlement (proposed) includes the entire portfolio of student loans serviced by or on behalf of Sallie Mae including private student loans, direct Department of Education loans and student loans that originated under the Federal Family Education Loan program. The far-reaching settlement also includes certain servicemembers whose rights had been violated almost a decade ago.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!

More than the money, some other steps included in the proposed settlement show that at least certain people who were behind the scenes had their sympathies and brains where they matter.

To begin with, the settlement demands that Sallie Mae must request all three major credit bureaus delete negative credit history entries caused by the improper default judgments and overcharging of interest rates. Sallie Mae is also required to pay the United States a civil penalty of $55,000.

If you are looking for education attorney jobs, find them here at LawCrossing.



Litigation Paralegal


McCormick Barstow LLP has an opportunity available for a certified paralegal. Qualifications: ...

Apply now

Criminal Defense Attorney

USA-CA-Santa Ana

The Firm is in need of a tenured and experienced Litigator. This associate would have the ability to...

Apply now

Associate Attorney


Full Job Description Sullivan Law & Associates, a premier family law firm in Orange County, is lo...

Apply now

Legal Assistant / Paralegal


Aggressive, growing law firm with multiple office locations seeks Legal Assistant / Paralegal for Sa...

Apply now




Search Now

Health Law Attorney


Stamford office of a BCG Attorney Search Top Ranked Law Firm seeks health law attorney with 3+ years...

Apply Now

Litigation Associate Attorney


Raleigh office of a BCG Attorney Search Top Ranked Law Firm seeks litigation associate attorney with...

Apply Now

Health Law Attorney

USA-CT-New Haven

New Haven office of a BCG Attorney Search Top Ranked Law Firm seeks health law attorney with 3+ year...

Apply Now


To Top