A federal judge has approved a class action settlement between Sallie Mae Inc. and consumers who say the company unlawfully tacked on a 25 percent collection fee to defaulted student loans. If you were assessed and/or paid this fee while living in California, you may be eligible to receive a refund.
Class Members of the Sallie Mae collection fee settlement include all persons in California who, within the period from July 13, 2006 through May 31, 2013, were assessed and/or paid a Collection Cost Assessment in connection with a private education loan serviced by Sallie Mae, as identified by Sallie Mae from its records using its best efforts.
You will be considered “in California” if: 1) you were assessed a Collection Cost Assessment during the Class Period while residing in California, or 2) you were a California resident at the end of any month during the Class Period in which any payment was applied to your Collection Cost Assessment.
Varies. Under the terms of the class action settlement, the fees paid by Class Members will be retroactively reduced to 8.75 percent at the time of charge-off, and will remain in effect for the life of the outstanding loan.
For borrowers who have paid off their loans, Sallie Mae will refund the difference between the amount of collection costs paid beyond the 8.75 percent rate and the amount that it wrote off in principal, interest and other fees, excluding collection costs. If the amount of collection costs paid in excess of 8.75 percent is less than the amount Sallie Mae wrote off, the borrower will get a $40 refund.
Proof of Purchase
Claim Form Deadline
N/A. Class Members will automatically receive settlement benefits if the class action settlement is approved.
Angelo Bottoni, et al. v. Sallie Mae Inc., et al., Case No. 3:10-cv-03602, in the U.S. District Court for the Northern District of California, San Francisco Division
The Sallie Mae collection fee settlement resolves a 2011 class action lawsuit (Bottoni v. Sallie Mae Inc.) that claims these fees were illegal because they were imposed on defaulted loans that were handed over to third-party collection agencies – before Sallie Mae ever incurred them. In total, Sallie Mae assessed nearly $117 million in these allegedly improper collection fees between 2006 and 2010, according to the class action lawsuit.
Sallie Mae denies the allegations but has agreed to shave off $76 million in debt owed by over 40,000 California borrowers by refunding these consumers the fees they paid.
If you wish to participate in the class action settlement and receive a refund, you do not have to take any action. You will automatically receive the relief described above if the Court grants final approval to the settlement at the November 21, 2013 Final Fairness Hearing.
If you wish to exclude yourself or object to the settlement, you must do so by October 7, 2013.
UPDATE: The Court granted final approval of the Bottoni, et al. v. Sallie Mae, Inc. class action settlement at the Final Fairness Hearing. Pursuant to the terms of the settlement, Sallie Mae plans to adjust Class Members’ accounts by Feb. 22, 2014 and arrange for the distribution of settlement checks to qualifying Class Members by March 19, 2014
Bottoni v. Sallie Mae, Inc. Administrator
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