If you were a military education borrower between 2009 and 2014, you may have money coming back from the government. The reason is a history of mischarges that happened.
In 2003, Congress enacted the Servicemembers Civil Relief Act, a modified version of the Soldiers’ and Sailors’ Civil Relief Act of 1940. As part of the SCRA, qualified members of the armed services were entitled to an interest rate cap of six percent on certain types of loans, including mortgages, credit cards, and car loans, which went into effect before they went on active duty.
A 2008 amendment to the Higher Education Act of 1965 extended the interest rate cap to federal student loans that also met the requirements of having been made before someone went onto active duty. The servicemember had to give the creditor written notice of his or her eligibility and a copy of the appropriate military orders. The branches of the military and Homeland Security had the responsibility to let servicemembers know about the program.
But in 2014 the Department of Justice filed suit against Navient, alleging multiple SCRA violations. Among them was the charge that the company didn’t give servicemembers the six percent interest rate on private and federal student loans. Navient entered a consent order, which means an agreement to follow specific actions to avoid further prosecution. Among them was a promise to reimburse servicemembers for any interest overcharges.
Starting in June 2014, some federal agency reviews of Navient began. They continued in September 2014 and again in January 2015. The format used statistical sampling to see whether there was a problem. The Department of Education said it found problems in less than one percent of cases.
However, several U.S. senators on hearing the results were skeptical and asked the Department of Education’s Inspector General to look at the reviews. The Inspector General’s Office said that under the sampling used, too few appropriate cases were tested, resulting in review errors and “inconsistent and inadequate corrective actions.”
Last month, Acting Education Secretary John B. King Jr. told the Senate education committee that the department was readying plans to refund money to all the active military personnel who paid more than six percent interest payments on education loans.
According to King, the department has “initiated a process to conduct a data match and automatically provide credit for any servicemember who was on active duty since federal student loans became eligible for the benefit.” Anyone on active duty back to 2008, whether or not they applied for the benefit, will receive the refund.
American Sentinel University is proud to have been named as a “Military Friendly School” for the ninth consecutive year. This distinction puts American Sentinel in the top 20 percent of colleges, universities and trade schools nationwide that do the most to embrace America’s military service members and veterans as students, and to dedicate resources to ensure their success both in the classroom and after graduation. Learn more about our military friendly education programs and distance learning courses.