Newark, New Jersey - The Department of Justice announced Monday that New Jersey Higher Education Student Assistance Authority (HESAA) has agreed to enter into a settlement and pay $50,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by obtaining unlawful court judgments against two military servicemembers who co-signed student loans.

Under the proposed consent decree, which was filed today in the United States District Court for the District of New Jersey and must still be approved by the Court, HESAA will pay $15,000 each to two servicemembers who had default judgments entered against them, and will pay a civil penalty of $20,000 to the United States. The consent decree also requires HESAA to provide SCRA training to its employees and outside counsel and develop new policies and procedures consistent with the SCRA. Since the United States opened its investigation, HESAA has worked cooperatively to revise its policies, procedures and training to comply with the SCRA and the terms of the consent decree.

“Congress enacted the Servicemembers Civil Relief Act to protect those who risk their lives serving our nation,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This settlement clearly sends the message that the Department of Justice will continue enforcing the Act vigorously to protect servicemembers and to ensure that all covered industries, including providers of student loans, comply fully with the law.”

“Through this settlement, we honor the brave members of our armed services by ensuring that their rights are protected when called to duty,” said Acting U.S. Attorney Rachael A. Honig for the District of New Jersey. “This office remains steadfast in its commitment to protect the rights of servicemembers in New Jersey. We thank HESAA for its cooperation with our investigation and HESAA’s acknowledgement that protecting the rights of servicemembers under the SCRA is of significant public importance.”

The Civil Rights Unit of the U.S. Attorney’s Office for the District of New Jersey launched its investigation after Coast Guard legal assistance attorneys in Portsmouth, Virginia, reported that HESAA had obtained a default judgment in 2019 against a Coast Guard Petty Officer who had co-signed for two student loans. The SCRA protects servicemembers from default judgments in circumstances in which, because of their military service, they may be unable to appear in court and defend themselves. Under the SCRA, if a lender files a civil lawsuit against a borrower and then seeks a default judgment, the lender must notify the court of the borrower’s military status.  If the borrower is in military service, the court cannot enter judgment until it appoints an attorney to represent the borrower, and the court must, in most circumstances, postpone the proceedings for at least 90 days.

In a complaint filed in the United States District Court for the District of New Jersey, the U.S. Attorney’s Office alleged that HESAA obtained default judgments against two SCRA-protected servicemembers by failing to disclose their military service and filing affidavits that inaccurately stated that they were not in the military. Lenders can verify an individual’s military status by searching the Defense Manpower Data Center’s free publicly available website (DMDC database) or by reviewing their files to see if there are applications, military leave and earnings statements, or military orders indicating military status. After conducting DMDC database searches that confirmed that the servicemembers were in military service, HESAA, through its outside counsel, nevertheless filed affidavits in state court that inaccurately stated that the servicemembers were not in military service.

This matter was handled jointly by the U.S. Attorney’s Office for the District of New Jersey and the Civil Rights Division’s Housing and Civil Enforcement Section. Since 2011, the department has obtained over $474 million in monetary relief for over 120,000 servicemembers through its enforcement of the SCRA. For more information about the department’s SCRA enforcement efforts, please visit www.servicemembers.gov.

Servicemembers and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at http://legalassistance.law.af.mil.