Judge: Class Action Against Nelnet Can Go Forward | Crime and courts

A federal judge will allow a Nelnet clbad action suit to cancel income-based repayment plans within the prescribed time frame for renewal.

Judge John Gerrard of the US District Court has dismissed two of the six complaints filed by Jessica Olsen and Teri Smith against the Lincoln-based student loan management company, but will allow the remaining four to continue.

Omaha lawyer Dave Domina, who represents women with Anthony Fiorentino, Cbadandra Miller and Dan Edelman, said the clbad action could affect hundreds of thousands of borrowers – can to be more – in the United States, where the student loan debt has exceeded $ 1.5 trillion.

"Our rough estimate of the size of the clbad of people who would be affected by our case, in a small or large proportion, could reach 6 million borrowers," he said.

In her complaint against Nelnet in June 2018, Olsen, of Oregon, stated that she had applied for an income-based repayment plan for her federally guaranteed student loans to Nelnet in 2014 and because of her low income, she was not obliged to pay monthly. payments as long as it reapplies each year.

Before he could submit his application electronically on February 10, 2015 – 10 days before the deadline of January 31, 2015, in accordance with his contract, which included the grace period – Nelnet capitalized his accumulated interest and added $ 8,700 to his loan.

Nelnet then placed Olsen on a standard repayment plan, which would have forced him to pay $ 968.10 a month for a decade, according to the lawsuit.

When she again asked for an income-based repayment plan in April 2017, Olsen said that a Nelnet employee had advised her to put her account in forbearance, which allowed her to stop making payments, but to re-add the accrued interest to the capital of his loan. .

This allowed Nelnet to increase the number of borrowers in its portfolio while minimizing the number of borrowers who successfully released their loan, the complaint said.

Olsen argued that Nelnet violated Nebraska's Consumer Protection Act, Nebraska's Uniform Business Practices Uniform Act, and Oregon's Illegal Business Practices Act by placing its account in the US. abstention.

In their briefs to the court, lawyers representing Nelnet stated that the Higher Education Act did not provide for any private right of action against student loan management companies and that federal law prejudged legislation. state quoted by Olsen.

Nelnet's defense is similar to a defense filed by Navient Corporation, a student loan services agent, in a federal lawsuit filed against it by the Commonwealth of Pennsylvania. In that case, a judge stated that the Higher Education Act did not prevent the Pennsylvania law on unfair trade practices and consumer protection.

Gerrard, writing in a May 21 order dismissing most of Nelnet's motion to close the case, said the federal law preempts only state law in some cases.

"In addition, the regulations mentioned by the defendants are intended to remedy the misconduct of a loan service provider and not to the loss of the borrower, and do not specifically address some of the damages alleged by the plaintiff, such as the suspension of a loan cancellation loan and the capitalization of accrued interest, "Gerrard wrote.

Gerrard ruled in favor of Olsen and Smith in four of their six applications, dismissing complaints that Nelnet had intentionally impeded their contract with the US Department of Education, which guarantees student loans, and that Nelnet had received and kept money he was not entitled to.