Student loan company Sallie Mae has agreed to pay approximately $97 million to settle accusations by the Justice Department that it overcharged certain members of the military and by the Federal Deposit Insurance Corp. that it misled consumers about late fees.
Sallie Mae will pay $60 million in compensation to more than 60,000 members of the military to settle Justice's charges that it violated a federally mandated 6% cap on interest rates. The department also charged Sallie Mae with unfairly obtaining default judgments against servicemembers.
In addition, authorities determined that the company improperly administered military benefits, including telling servicemen that they had to be deployed to receive educational benefits.
Sallie Mae will also pay $6.6 million in civil penalties and up to $30 million in refunds of late-fee assessments, in response to FDIC claims that it misrepresented its billing practices in a way that maximized its receipt of late fees. The bank regulator accused Sallie Mae of failing to disclose how borrowers could avoid paying late fees.
The Department of Education and the Consumer Financial Protection Bureau were also involved in the investigations.