According to the Huffington Post, federal investigators say that Sallie Mae cheated active-duty military service members on their federal student loans.
The news outlet reported that the lender allegedly violated the Servicemembers Civil Relief Act in servicing some federal student loans, which requires companies to reduce interest rates on student loans to no more than 6 percent upon request by service members called to active duty.
The lender’s contract with the Education Department reportedly requires it to comply at all times with all relevant federal laws in its pursuit of borrowers’ monthly payments on their federal student loans. Sallie Mae cautioned that it was under investigation for how it treated service members, but did not specify whether the probe targeted private loans, federal student loans, or both, according to the HuffPost.
“These accounts, if true, of Sallie Mae violating the critical protections of our men and women in uniform are very disturbing,” Sen. Tom Harkin (D-Iowa), who as chairman of the Senate Health, Education, Labor and Pensions committee oversees the Education Department, told the HuffPost. “As we proceed with our hearings on the reauthorization of the Higher Education Act, protecting the rights of military families and holding servicers like Sallie Mae accountable will be a priority.”
Sallie Mae was recently rewarded with a five-year extension of its existing contract to collect payments on federal student loans.
My Student Loans Are Financially Crippling. What Can I Do?
As we have been blogging about over the last couple of years, student loans are a tremendous burden many young Americans are dealing with. Student loan debt now surpasses credit card debt in this country. Earlier this year, the Associated Press reported that the average four-year graduate accumulates $26,000 to $29,000 in loans, and some leave college with six figures worth of debt.
It is very difficult to discharge student loans through bankruptcy; however, it is not unheard of. In 2012, data showed that in bankruptcy cases, 47 percent of federal student loans were discharged in full, 21 percent resulted in a better payment and 12 percent settled for less than was due.
It should be noted that a bankruptcy could help you even if you cannot get student loan debts discharged. A Chapter 7 bankruptcy could help discharge credit card debt, medical bills and unsecured personal loans, which could help free up money to make student loan payments easier.
If you are under water financially because of student loans, call us today at (202) 483-6070. You can also visit our Facebook page, our LinkedIn page, our Google+ page and our Twitter page for more information about our services. We are located near the Navy Memorial/Metro Station.
Law Firm of Kevin D. Judd– Maryland and Washington DC bankruptcy attorney
Judd’s Judgment: The median 2009 net worth for a household without outstanding student debt was $117,700.