Sallie Mae Accused Of Excessive Rates On This Group’s Student Loans
Career College Central summary:
Private student lender Sallie Mae is bracing for regulatory action by the federal government, based on accusations that it charged excessive interest rates to military borrowers of its student loans.
According to sources, in July, the Federal Deposit Insurance Corporation informed Sallie Mae, the nation's largest private student loan lender, that it was planning a "new, formal enforcement action," but word did not surface until late last week when Sallie Mae released its quarterly earnings report. Preparations, however, seem to have been in the works for at least several months.
Sallie Mae has a dedicated Website for its military customers, and its Military Benefits page lists benefits and identifies the rate on its loans as 6%. It's not clear how high or how often Sallie Mae is believed to have gone over the rate cap—or on what military loans and to which borrowers, or how this rate hike was affected.
Any enforcement action would likely be under the Servicemembers Civil Relief Act, which mandates the 6% rate cap. The Act also covers people who borrowed as civilians. If an active duty enlisted member of the armed forces borrowed money in excess of 6% as a civilian, then entered the military, the lender is obliged to honor any request to drop the rate to 6%. This would include civilian borrowers of Sallie Mae loans. It is not clear how many of these loans would be subject to such a reduction. A spokesperson for Sallie Mae could not be reached for comment.
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