Home > News > Lawsuit Against Sallie Mae Alleges Fraud

Lawsuit Against Sallie Mae Alleges Fraud

The Chronicle of Higher Education recently reported that a former Sallie Mae employee has filed a federal False Claims Act against the company alleging that Sallie Mae “had been using the practice of granting forbearances to systematically balloon student-loan debts.”  From the article:

In the system of government-guaranteed student loans, the tactic was part of a strategy to grow student debts as large as possible, increasing Sallie Mae’s profits, before taxpayers and debtors were stuck with the final bill, said the former Sallie Mae employee, Michael Zahara. 

For the legal geeks out there, I’ve attached a copy of the complaint.  Zahara v. SLM Corporation

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  1. TAP
    January 9, 2009 at 1:09 pm | #1

    I am very familiar with these Sallie Mae tactics.
    This practice of pressuring or falsifying forbearances
    for profit to this lender and others is not only not
    uncommon, it has been going on a long time.

    The problem with guaranteed student loans, is
    the guarantee of payment in case of default to
    include interest accumulation. This inducement
    is the center of “corruption” with student loan
    lenders. The federal government has been subsidizing
    this practice for years, well knowing.

    As far as I am concerned the DOE and DHHS
    should be included in the lawsuit as well. It may
    be easy to try to dismiss a case from one with
    a “so called shady past”, but the government
    can no longer turn a blind eye, to the the thousands
    of students and parents, who know this practice
    to be fact.

    I hope in this new year, this illegal activity
    by the student loan lenders get’s more press
    coverage – hopefully it will not get buried under
    all other economic news. No, SLMA should
    NOT get any TARP money. They have
    been mooching off of the federal government
    for far to long – 30 some years, at the expense
    of bright, hard working students.

    The whole GSE/SLMA program was criminal -
    and it is a shame the federal government has
    known this for quite some time and has done
    nothing about it.

    We need more than one whistle blowing employee-
    we need national outrage by the American people.

  2. January 11, 2009 at 12:23 pm | #2
  3. Brett Nichols
    March 1, 2011 at 11:28 am | #3

    My wife and I both have student loans. My original loan was $10,000 which I paid on for several years only to find out that the interest on these loans is compounded qtrly which increases the loan. I’m now in default because I’m unemployed and we lost our home and Sallie Mae defaulted my loan because I could not come up with $1700 to bring it current and $460 per month for payments. My loan has not been sent to Texas Guaranteed who advised that I just need to pay $200 per month and my balance is now $18,000, if no payment arrangements are made within 30 days they will add 15% to the balance for collection fees and the interest keeps accumulating. My wife had a loan for $7500 which the same issues are going on and the balance is now $33,000. As far as I’m concerned student loans are legalized loan sharks because they are backed by the government. We wrote our congressman, John McCain, but that did not do any good. When your broke you are broke. They advised my wife that they will start wage garnishment. Go figure so they can take more of what you don’t have.

    • alice
      November 2, 2011 at 4:10 pm | #4

      when they file for garnishment check ALL the paperwork, INLUDEING your address. They altered my address in order to push this through and that’s FRAUD

  4. alice
    April 2, 2011 at 10:29 am | #5

    In 2002 My son wanted to attend Chubb Institute in New York. When applying for financial aid we were told that before he could be considered for any other aid I had to apply for a parents loan. Given that I was only making 250 a week and had just had an auto repossessed I told the financial aid office I was certain I would be denied. I filled out the application and was never told I had been granted a loan for over 13,000 so we thought that with his own federal loan they had found grants for him.

    In February 2004 a lawsuit was filed against me in NY By Sallie Mae. They claim to have given service to someone they state was a “co-tenant” named Jorge Torres. At no time have I ever lived with anyone by that name. The owner of the house I lived in is Juanita And Julio Torres who are my aunt and uncle. They have since filed in Florida to recognize this judgment and have stated they sent me a copy at 21609 Sally St SE Palm Bay Fl. My address is 1069. They then sent a summons for a deposition to 31069 Sally st. The process server located me due to her ability to figure out that there is no address as stated on her paperwork. During the deposition their attorney asked me if my address was 21069 Sally St and I said no. He then asked me what it was and I provided him with the correct address Last month they filed for a garnishment with no notice to me whatsoever. I asked their attorney for a copy of the promissory note they claim I signed, it took him in excess of 30 days to get it to me and only after I notified him that he failed to do so and while the signature is close it does not appear to be mine. The copy of his letter prefacing the copy of a promissory note shows he used the address he knew to be invalid. This leads me to believe he deliberately did so use a fake address in order to prevent me from any self defense Additionally I had asked 2 other collection agencies for this beginning in 2008 and their current attorney has chosen to NOT send me a copy of all pertinent court documents filed here in Florida including the garnishment at to my correct address and in all likelihood has told the court he has while using an address he knows is false in order to once again deprive me of my rights

    While I am filing in Florida to have the garnishment removed I must also file in NY to have this vacated. If Sallie Mae and their representative engages in this type of fraud here in Florida it’s not much of a stretch to conclude they engaged in sewer service in NY and have probably done so to many others.

  1. November 6, 2008 at 1:11 am | #1
  2. November 12, 2008 at 5:55 pm | #2

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