JUSTICE DEPARTMENT REACHES $60 MILLION SETTLEMENT WITH SALLIE MAE TO RESOLVE ALLEGATIONS OF CHARGING MILITARY SERVICEMEMBERS EXCESSIVE RATES ON STUDENT LOANS
Settlement Resolves the Department’s First Lawsuit against Student Loan Owners and Servicers for Violating the Rights of Servicemembers
WASHINGTON – The Department of Justice today announced the federal government’s first lawsuit filed against owners and servicers of student loans for violating the rights of servicemembers eligible for benefits and protections under the Servicemembers Civil Relief Act (SCRA). The United States’ complaint alleges that three defendants, collectively known as Sallie Mae, engaged in a nationwide pattern or practice, dating as far back as 2005, of violating the SCRA by failing to provide members of the military the six percent interest rate cap to which they were entitled. The three defendants are Sallie Mae Inc. (now known as Navient Solutions Inc.), SLM DE Corporation (now known as Navient DE Corporation), and Sallie Mae Bank. The complaint further alleges that defendants Sallie Mae Inc. and SLM DE Corporation also violated the SCRA by improperly obtaining default judgments against servicemembers.
In addition to the complaint, the department filed a proposed settlement of the lawsuit which will require Sallie Mae to pay $60 million to compensate servicemembers for the alleged SCRA violations. The department estimates that about 60,000 servicemembers will receive compensation under the settlement. The settlement and complaint have been filed in the U.S. District Court for the District of Delaware and the settlement is pending approval in that court.
“Federal law protects our servicemembers from having to repay loans under terms that are unaffordable or unfair,” said Attorney General Eric Holder. “That is the least we owe our brave servicemembers who make such great sacrifices for us. But as alleged, the student lender Sallie Mae sidestepped this requirement by charging excessive rates to borrowers who filed documents proving they were members of the U.S. military. By requiring Sallie Mae to compensate its victims, we are sending a clear message to all lenders and servicers who would deprive our servicemembers of the basic benefits and protections to which they are entitled: this type of conduct is more than just inappropriate; it is inexcusable. And it will not be tolerated.”
“Our men and women in uniform who are called to active duty should not be subjected to additional red tape to receive the benefits they’re entitled to for serving their country,” said U.S. Education Secretary Arne Duncan. “What’s more, every student who has taken out a federal student loan should have the peace of mind that the department’s servicers are following the law and treating all borrowers fairly. Federal student loans are a critical part of helping every American find the clearest path to the middle class through a higher education, so we must do everything we can to ensure quality customer service for every borrower.”
“Our brave men and women in the military should not have to worry about receiving the benefits the SCRA provides,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “The Justice Department continues to enforce vigorously the laws that protect service members while they do their difficult and necessary work.”
“I applaud the work of the Department of Justice and all the agencies whose joint cooperation made this settlement possible,” said U.S. Attorney Charles M. Oberly III for the District of Delaware. “The least we can do for our brave men and women who sacrifice so much to preserve our freedom is to see that they are afforded the benefits they are lawfully entitled to.”
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Most of the focus regarding Earth’s rising sea level has been on the Arctic Ocean, where ice in the North Pole has been melting rapidly for decades. But now there’s even worse news: in the South Pole, Antarctica is beginning to melt and the results will be catastrophic.
According to papers scheduled to be published this week in two different scientific journals, large portions of an ice sheet in west Antarctica have started to melt, kicking off a process that could raise our oceans by over 10 feet in the next several hundred years. What would that do to the Earth? Well, make sure your great-great-great-great grandkids aren’t planning on living in Miami.
The source of the melting ice is believed to be warm water being pushed into the South Pole by sweeping winds that has made its up to the surface. The papers are cautious in appropriating blame—Antarctica may be melting because of the effects of global warming, or natural factors, or some combination—but the language used by scientists to describe the net result is severe.
"It shook me a little bit," said one Penn State climate scientists quoted by the New York Times. A NASA scientist seemed to be more in disbelief: "This is really happening."
[image via Getty]
It was about a year ago when House Majority Leader Eric Cantor (R-Va.) appeared on Fox News and told viewers that Congress should be “focused on trying to deal with the ultimate problem, which is this growing deficit.”
There were a couple of glaring problems with the comment. For one thing, to prioritize the deficit as the “ultimate problem” – as opposed to, say, creating jobs and reducing unemployment – is to have a fairly warped sense of urgent policy needs. For another, the deficit, in reality, is most certainly not “growing.”
The U.S. government ran a big surplus in April, thanks to a flood of tax payments that helped keep the budget on track for the lowest annual deficit in six years…. Through the first seven months of the 2014 budget year, which began Oct. 1, the deficit totals $306.4 billion. That’s down 37 percent from the same period last year.
The Congressional Budget Office is forecasting a deficit of $492 billion for the full budget year. That would be the narrowest gap since 2008.
To be sure, none of this should come as a surprise, at least not to the policy mainstream. In recent years, the federal government has raised taxes and cut spending – and wouldn’t you know it, when Washington taken in more while spending less, the deficit gets smaller.
This is a basic budgetary truism that Republicans continue to resist. Indeed, last year, when top marginal rates increased on households making more than $400,000 a year, a variety of GOP lawmakers argued that this would likely cause the deficit to go up – as they saw it, higher taxes on the wealthy would slow growth, which would mean fewer jobs, which would mean fewer people paying income taxes, which would mean a larger deficit.
It appears on this, Republicans had it backwards, which will do nothing to shake the Beltway perception of the GOP as the “fiscally responsible” party.
Let’s also note that the shrinking deficit – we’re seeing the fastest reduction since the end of World War II – is also one of the nation’s best-kept secrets. It was just last year when an independent national poll asked Americans whether they thought the deficit was increasing, decreasing, or staying about the same. Only 6 percent of the country recognized reality. That’s not a typo; it was just 6 percent.
The fact remains, however, that the annual budget deficit is on track this year to have shrunk by about $900 billion since President Obama took the oath of office.
There are still quite a few politicians who claim, just a matter of course, that in the Obama era, the United States runs “a trillion-dollar deficit every year.” It’s well past time for those folks to update their talking points, or at least try to keep up with current events.
To reiterate a point from last fall, I should note that I don’t consider this sharp reduction in the deficit to be good news. On the contrary, I strongly believe the nation should be borrowing more, not less, taking advantage of low interest rates, investing heavily in infrastructure and economic development, creating millions of jobs, and leaving deficit reduction for another day.
That said, if we’re going to have a fiscal debate, it should at least be rooted in reality, not silly misconceptions. And the reality is, we’re witnessing deficit reduction at a truly remarkable clip. Every conservative complaint about fiscal recklessness and irresponsibility in the Obama era is completely divorced from reality.