Home > Students > $60M in Student Loan Refund Checks: Is Yours in the Mail?

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Nearly 78,000 U.S. military members will receive $60 million in total settlement payouts from Navient Corp., a student loan servicer formerly part of Sallie Mae, for charging active duty service members excessive interest on their private and federal education loans. Navient and the Department of Justice reached the settlement in May 2014, but the DOJ just announced the payments, which will begin in June. Sallie Mae and Navient entered into the settlement agreement without admitting any wrongdoing.

The checks will range from $10 to more than $100,000, averaging $771, and will be mailed June 12, according to a news release from the DOJ. Navient must also pay a $55,000 civil penalty and request the three major credit reporting agencies (Equifax, Experian and TransUnion) remove negative trade lines on borrowers’ credit histories that came about because of the “interest rate overcharges and improper default judgments,” the news release says. That could potentially make a big difference in the credit standings and overall financial health of those affected. Additionally, Navient was ordered to improve the process by which it notifies military personnel of their eligibility for Servicemember Civil Relief Act benefits.

Under the SCRA, student loans made to members of the U.S. armed forces are subject to a 6% cap, and Navient was accused of charging service members higher rates, therefore violating the SCRA.

“A key issue in the matter was the documentation needed to qualify for SCRA benefits,” wrote Patricia Christel, vice president of corporate communications for Navient, in an email statement to Credit.com. “The largest group of customers receiving compensation are service members who had not provided a written request and copy of orders calling the service member to active duty, as required by the SCRA statute and previous guidance from the Department of Education and other government agencies.”

In a review of servicers’ compliance with the SCRA, the Department of Education found that borrowers were denied the 6% interest rate cap less than 1% of the time. The review included the four major student loan servicers: Navient, Great Lakes, Nelnet and PHEAA.

Since this settlement, the Department of Education streamlined the process for getting active duty military access to the lower interest rates. It is working with a Department of Defense database to identify military personnel who qualify for lower interest rates under SCRA, rather than leaving it to service members to apply, as they previously were. Starting June 12, service members can call (855) 382-6421 if they have questions about their eligibility for monetary relief. Consumers are entitled to a free annual credit report from each of the three major credit reporting agencies through AnnualCreditReport.com to check for errors or any other issues. You can also get a free credit report summary from Credit.com, which is updated monthly so you can watch for important changes.

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  • Dave Davidson

    Just to clarify as this was almost 5 years ago now. That 6% cap was just during active duty status correct? So basically Training/Deployments for National Guard and Reserve.

    • http://blog.credit.com/author/christine-digangi/ Christine DiGangi

      The cap applies during active duty.

  • Cesar Ocasio

    I got a check for $372.94 with a Notice and Release of Claims letter. But not sure if I will cash it, because it looks they try to buy us out of claims. Reason is they settle for over $100 millions, and only sending $60 millions in checks. What happened to the remaining millions?

  • BungHoleBurgers

    I got a check with 5 figures on it from Sallie Mae/Navient, holy hell! I thought it was a scam at first, but it seems legit. Guess Sallie Mae really put the screws to me interest rate wise before I enlisted. Payback’s a b*tch!

    A good point was brought up about the Notice and Release of Claims letter. If you do cash the check, you’re agreeing that Sallie Mae/Navient is absolved of any and all future liability for their past wrongdoing. But man, 5 figures sure is tempting.

    • http://blog.credit.com/author/christine-digangi/ Christine DiGangi

      I’m curious — do you plan on not cashing the check?

  • Damusicman

    Will this now be taxable income? I got a check for 5 figures and am wondering what the tax will be on this.

    • http://blog.credit.com/author/christine-digangi/ Christine DiGangi

      Excellent question. I’m trying to find you an answer.

      • Terrell Cheeks

        I received a very small check as well. I joined the military in 2008 and
        got out in 2014 all the while my student loan was active. Is there
        anything I can do if i feel that I should be owed a lot more? 6 years of
        an interest rate that is higher than 6% should get me more than a $166
        check correct?

      • Melissa Barksdale

        Did you find and answer to this questions?

        • http://blog.credit.com/author/christine-digangi/ Christine DiGangi

          I’ve reached out to the Department of Education and the Department of Justice on this multiple times and have not yet gotten an answer.

          • Crystal Metz

            I received a 1099-misc from navient. I don’t think its fair that I paid navient money from my already taxed income, they gave it back to me, and I have to pay taxes on it again?

          • Ethan

            Hello Christine, did you ever hear back from the Govt. about whether this settlement income is taxable?

          • Jeanine Skowronski

            You may want to consult with your tax professional.

            Thank you,

            Jeanine

    • LD

      I just got a check today, I have the same question. This is life changing for my family but I want to make sure I’m covered if I cash it.

      • http://blog.credit.com/author/christine-digangi/ Christine DiGangi

        I’ve asked the DOJ about this and have yet to receive a response. I’ll update the story when I have an answer.

  • http://www.Credit.com/ Gerri Detweiler

    What types of loans do you have? Federal or private? Legally I don’t believe they are required to but I am not sure what they do voluntarily. Have you asked?

  • dlynay

    My husband got a smaller check but he feels it should be much more. Although he’s a reservists a lot of his training time was under active duty status. But they only paid out for the year he was deployed.

  • Terrell Cheeks

    I received a very small check as well. I joined the military in 2008 and got out in 2014 all the while my student loan was active. Is there anything I can do if i feel that I should be owed a lot more? 6 years of an interest rate that is higher than 6% should get me more than a $166 check right?

    • http://blog.credit.com/author/christine-digangi/ Christine DiGangi

      I’m not sure. Did any contact information come with the check?

      • Terrell Cheeks

        yes i called one number they said they would get back to me. Two days later I get a call from a different person telling me to call a different number belonging to the Department of Justice. I feel like I’m getting the run-a-round.

        • http://blog.credit.com/author/christine-digangi/ Christine DiGangi

          As frustrating as that is, keep trying to get someone to answer your question. I’ve been trying to get someone at the DOJ to answer my question about taxes on these checks for weeks, and I’ve had a similar experience. Keep a record of your calls, be patient and hope for a resolution soon.

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