The Higher Education Act – which is the massively complex set of laws that governs most of the student loan system – does not provide for any private right of action that would allow individual student loan borrowers to go after their loan servicer for violations, even if the servicer violates the Higher Education Act itself.laws that make it illegal for any kind of consumer financial company to engage in unfair or deceptive business practices.
. The court held that claims against federal student loan servicers under state law for misrepresentations of federal loan programs are not necessarily pre-empted by federal law. In other words, student loan borrowers could sue their servicers under state law and, potentially, prevail.Lawson-Ross v. Great Lakes
, borrowers sued Great Lakes Higher Education — a U.S. Department of Education student loan servicer — for making misrepresentations to borrowers about the Public Service Loan Forgiveness program. The student loan borrowers alleged that Great Lakes made affirmative misrepresentations to them and other borrowers that they were on track to have their student loans forgiven under PSLF, when in fact their loans were ineligible.
The 11th Circuit held that the Higher Education Act does not pre-empt the legal claims against Great Lakes for its affirmative misrepresentations about the borrowers’ eligibility for Public Service Loan Forgiveness . The court noted, “Borrowers alleged that when Great Lakes chose to provide them with information it was not required to disclose—about their eligibility for the PSLF Program—it gave false information...
However, this decision signifies a growing movement in federal courts towards allowing state law-based legal claims against federal student loan servicers. With positive decisions from two different circuits, more federal courts can cite to binding precedent allowing these types of lawsuits to proceed. Momentum is building in favor of student loan borrowers.. The case will be sent back to federal District court for further proceedings.
Never lie to someone who trusts you, and never trust someone who lies to you.
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