In order to resolve federal allegations that SouthEast Bank in Tennessee discriminated against Black and Aboriginal graduates who wanted to refinance their student loans, the bank agreed to pay $1.5 million.
The settlement ends the Department of Justice’s allegations that the bank engaged in lending discrimination by allegedly disproportionately rejecting or discouraging Black and Aboriginal college graduates’ attempts to refinance their student loans.
“Everyone in our country should have a fair chance and equal opportunity to refinance a school loan,” Assistant Attorney General Kristen Clarke stated in a news release.
“By rejecting graduates based on where they obtained the degree, SouthEast Bank’s policy denied and discouraged Black, American Indian and Alaska Native graduates seeking to refinance student loans for reasons that were wholly unrelated to their personal merit of ability to repay their loans,” Clarke stated.
Clarke stated that the case serves as an illustration of “historic inequities in lending and refinance opportunities” for blacks, highlighting the significance of the DOJ’s ongoing efforts to combat such violations.
The U.S. District Court for Eastern Tennessee in Knoxville received a complaint from the DOJ against SouthEast Bank on Saturday.
According to the complaint, SouthEast Bank employees automatically rejected college and university graduates whose default rates above a predefined benchmark set by the bank between December 2015 and April 2021.
According to the DOJ, black college graduates were up to 4.3 times more likely than non-minority graduates to have their refinance application denied as a result of the policy.
Compared to non-minority graduates, Alaskan Natives and Indigenous students had a thrice higher chance of being rejected.
Additionally, the DOJ accused SouthEast Bank officials of turning down refinance requests from graduates of over 84% of historically black schools and universities and other institutions with a majority-black student body.
In contrast, the DOJ found that graduates of 21% of colleges and universities with non-majority-black student bodies rejected refinance requests.
For the settlement to be effective, the federal court must approve it.
Car Problems Surge Across Oklahoma as Temperatures Drop Below Freezing
If accepted, the settlement will increase access to refinance for qualified applicants who graduated from colleges and universities whose alumni were previously barred and pay qualifying applicants who were refused refinance.
Additionally, the settlement would assist in funding consumer financial education for those schools’ graduates and students.
New Kansas Bill Could Make Move Over Law Apply to Disabled and Stopped Cars
The Federal Deposit Insurance Corporation sent the case to the DOJ, which then began its investigation and court filing.
Officials from SouthEast Bank assisted in resolving the accusations and collaborated with the DOJ’s inquiry.
About The Author
