Dive Brief:
- Nearly 78,000 service members will receive a collective $60 million in a Justice Department settlement with student loan giant Navient.
- The Huffington Post points to the settlement figures as evidence that the U.S. Department of Education vastly undercounted Navient’s wrongdoing in its own probe, which it said found Navient overcharged military borrowers less than 1% of the time.
- Based on the Justice Department settlement, Navient sent checks to service members ranging from $10 to more than $100,000 this month for failing to honor a 6% interest rate cap on loans for active military that was required by federal law.
Dive Insight:
The Education Department held Navient to lower standards than the Justice Department in its probe of the loan servicer’s actions, only considering the loan servicer to be improperly charging active-duty military personnel if it did so after they explicitly requested the rate cap benefit in writing. The Huffington Post reports that the department missed a large number of overcharged service members because it did not examine phone records, which in some cases show service members requesting the benefit verbally.
Many student advocates have criticized the Department of Education’s investigation into Navient, saying that it has failed the students it is meant to protect. While there have been calls for the department to cut ties with Navient, officials have not indicated any intention of doing so.