A class action lawsuit filed earlier this month against the U.S. Department of Education alleges that students were overcharged on loans received directly from the federal government's Direct Loan Program.
The lawsuit claims that the department illegally capitalized or added principal on consolidated student loans between the borrower's June payment date and June 30 on loans repaid since March 2001.
The law firm, Sprenger & Lang, filed the suit in U.S. District Court for the District of Columbia after the billing discrepancies were discovered by Brenda Kay Pfeiffer, a Minnesota resident and plaintiff, who was told by department officials that excess interest capitalization should not have been added to her account, but the computer programs were set up to do so anyway.
More than three million borrowers have consolidated student loans with total debt in excess of $72 million.
Craig Munier, director of the Office of Scholarships and Financial Aid, said he wasn't convinced the billing issues were a result of a computer glitch.
The Washington Post broke the news regarding the department's possible overcharges earlier this month in a report stating a computer glitch was the cause of the billing discrepancies.
"My understanding after talking with the department is there wasn't an error made," Munier said. "That the servicing company that services the loan was doing exactly what Congress told it."
Munier said a student getting over-billed was nothing new in the loan industry.
"Three or four years ago, Sallie Mae overcharged about 800,000 borrowers. It centered around a miscalculation in interest rates," Munier said.
He said Sallie Mae corrected their mistake and so should the Department of Education if a mistake is found.
"If a mistake has been made, it has to be corrected," Munier said. "It would be unacceptable for students to be charged for more than they owe."
Rebecca Thompson, legislative director for the United States Student Association Foundation, which serves as the official voice for students on Capitol Hill and in the Department of Education, said her group would be involved in government regulations on loans and researching the alleged overcharges.
Thompson said the foundation's president, Jennifer Pae, was appointed as the student's primary negotiator for the Student Loan Negotiated Rulemaking Committee, which will change regulations on loan programs and was spearheaded by the Department of Education.
She said her group has a two-way approach, from inside and outside Capitol Hill, to represent students' best interests.
"With the negotiated rulemaking committee, we want to make sure loans are more manageable for students," Thompson said. "We're also looking into it (the overcharges) for more understanding if it was a glitch that overcharged students."
Thompson encouraged students interested in her group's work or concerned about possible overcharges to visit the United States Student Association's Web site.
Steven Sprenger, lead counsel in the suit, said in a news release that he was disappointed the over billings were knowingly allowed to go on.
"It's very unfortunate that officials within the department allegedly knew about the problem and were unwilling to correct the situation," Sprenger said. "The Department of Education's improper addition of interest capitalization takes money out of the pockets of the people they are supposed to be helping."
is a member of the 
