Air Force veteran sues collection agency and Pacific Lutheran University over student loans

Seattle, Wash. — A veteran of the U.S. Air Force is suing Pacific Lutheran University and a debt collection agency called Financial Assistance Inc., for violating a law that limits the interest charged on a servicemember’s loan.

Elias Johnson-Saucier took out a private loan with Pacific Lutheran University of about $6,000.

“I loved my time there. They’re a great institution. They provide a great education,” Johnson-Saucier said.

But he left the school at the height of the recession, and when he couldn’t pay, the loan was sent to collections.

Johnson-Saucier then joined the Air Force in August of 2010.

The U.S. Servicemembers Civil Relief Act states that a servicemember may not be charged more than 6 percent interest on any loan that was taken out prior to entering service.

The law states that “the term ‘interest’ includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability.”

Yet the lawsuit states when Johnson-Saucier’s loan went to collections, Financial Assistance Inc. (FAI), based in Bellevue, charged a 50 percent collection fee, bringing the new debt total to $7,964.74.

While Johnson-Saucier said he has now paid about $7,000, he continues to be billed for larger amounts, due to growing fees and interest.

The lawsuit states that he tried to resolve the problem with FAI without success. He said he told them he was an active duty servicemember, but the interest and fees still far exceeded 6 percent.

“If everything was said and done, and they got their way, I think I would pay this debt probably 3 times over,” he said. “I like math. But that’s a Gordian knot of math there that I can’t wrap my head around.”

Now with a wife and four sons, Johnson-Saucier said his family recently bought a house.

“Every time I have to have that conversation with my wife about where we’re at, where we’re going and the timeline, that’s a tough – it’s frustrating. I want it to be done,” he said.

His attorney, Bob Mitchell, said he has also seen at least another dozen lawsuits involving the same collection agency, in which the agency charges 50 percent collection fees on federal student loans.

But the U.S. Code of Federal Regulations states that for loans placed with a collection firm after July 1, 2008, any collection fees resulting from litigation may not exceed 40 percent of the amount of principal, interest, and late charges collected, plus court costs.

While Johnson-Saucier’s loan was not a federal loan, Mitchell said his case is still egregious because of the charges imposed on a servicemember.

“As a former Marine, I feel like service members are entitled to a little more respect than the average consumer,” Mitchell said.

KIRO 7 reached out to both Pacific Lutheran University and Financial Assistance Inc., but neither wanted to comment on this story.

Both entities however, filed replies in court. They deny the basic allegations in Johnson-Saucier’s complaint.

Financial Assistance Inc. contracts with both Pacific Lutheran University and Washington State University, to collect on student loans.

“If they’re doing this on behalf of Washington State University as well, then there could be hundreds, maybe thousands of Washington consumers alone, that are being charged too much interest,” Mitchell said.

Cox Media Group