May 13, 2014 / 6:30 PM / in 3 years

Sallie Mae to refund military members on student loans

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WASHINGTON, May 13 (Reuters) - Student loan provider Sallie Mae will refund around $60 million to members of the military whose interest rates it failed to cap at 6 percent, in violation of federal law, the U.S. Justice Department announced Tuesday.

The Federal Deposit Insurance Corp announced a parallel settlement with the lender that includes an additional $30 million to harmed borrowers.

A spin-off of Sallie Mae, Navient Corp., told shareholders last week that it had set aside $173 million to settle the two investigations.

The settlement with the Justice Department will compensate an estimated 60,000 service members who were charged more than the legally mandated 6 percent interest rate put in place to keep education affordable for military personnel.

Reporting By Julia Edwards and Aruna Viswanatha; Editing by Chizu Nomiyama

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