Sallie Mae, Navient To Pay $139 Million Settling Probes Into Cheating Troops On Student Loans

WASHINGTON -- Sallie Mae and its former loan servicing unit agreed to pay a combined $139 million to resolve federal allegations that the companies cheated soldiers and charged other borrowers unfair fees on student loans.

The Department of Justice and the Federal Deposit Insurance Corp. accused Sallie Mae and its loan unit, now called Navient, of intentionally violating the Servicemembers Civil Relief Act by overcharging active-duty troops beginning in 2005, a period in which service members were fighting wars in Iraq and Afghanistan. The FDIC said Sallie Mae and Navient processed borrowers’ monthly student loan payments in a way designed to maximize late fees.

Despite the settlement and the evidence amassed by federal investigators, the Education Department hasn't determined whether it will take any action on Navient's loan servicing contract with the federal government. Education Secretary Arne Duncan said he instructed department officials to immediately conduct a review to determine "what appropriate actions, if any," should be taken against the company.

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