LINCOLN, Neb., May 22, 2019 /PRNewswire/ -- A national class action against one of America's largest student loan companies will go forward.
The United States District Court for the District of Nebraska (Hon. John M. Gerrard, Judge) issued a ruling on May 22 holding that Jessica Olsen of Oregon and Teri Smith of Florida may proceed with their national class action case.
Olsen and Smith allege that Nelnet, Inc. of Lincoln breached student loan contracts and promissory notes held by the company, and are requiring an accounting from the company for its breaches.
The students' lawyer, David Domina of Domina Law Group pc llo in Omaha, NE said the Court's ruling for the Plaintiffs is "consistent with a clear federal legislative intent [expressed at 20 USC 1082] to make companies in Nelnet's business financially responsible for their misconduct."
Domina Law Group represents Olsen and Smith along with Anthony Fiorentino, Cassandra Miller and Dan Edelman of Chicago, IL.
The 23 page Court ruling allows four of the students' six claims to go forward against Nelnet. In 2018, Nelnet described itself in connection with an acquisition.
Domina and his colleagues filed the Olsen lawsuit in June 2018 (Case No. 4:18-cv-03081). They sued for two separate classes of student borrowers. One class borrowed funds more than five years before suit was filed and used an IDR Plan which was not processed correctly by Nelnet. The second class consists of students who fall into a separate legal category with different features to change lending terms. Each class is "composed of tens to hundreds of thousands of individuals and thus are so numerous" as to require that they be dealt with in a class action. (Am Compl Filing # 37, p14).
Ms. Olsen and Ms. Smith contend their student loans, serviced by Nelnet were mismanaged and that this caused them to lose available privileges to pay the loans at lower interest rates and on more favorable terms. They allege Nelnet breached contracts with the government made to help students, and made misrepresentations about what had to be done by students to take advantage of favorable loan options.
Nelnet, Inc. shares trade on the New York Stock Exchange under the symbol "NNI". The company operates more than 50 subsidiaries from its headquarters in Lincoln. The stock was lower in trading on Monday and Tuesday after the ruling.
In a May 8, 2019PR Newswire Release, Nelnet was described as operating "four primary business segments, earning interest income on loans in its Asset Generation and Management segment and fee-based revenue in its Loan Servicing and Systems; Education Technology, Services, and Payment Processing; and Communications segments."
The same press release identified "the company's average balance of loans in the first quarter of 2019 [as] $22.3 billion compared with $21.9 billion for the same period in 2018."
Forbes' Zack Friedman called student debt a $1.5 trillion crisis and "now the second highest consumer debt category - behind only mortgage debt - and higher than both credit cards and auto loans."
As of the time of this release, Nelnet has not reacted to the court ruling.