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Financial Services Law Insights and Observations

District Court certifies student loan borrower class action

Courts Student Lending Class Action Student Loan Servicer State Issues Bank Regulatory

Courts

On December 2, the U.S. District Court for the Northern District of New York granted final approval of a class of student loan borrowers who claimed a defendant student loan servicer and other associated entities interfered with their rights to prepay or consolidate their Federal Family Education Loan Program student loans in accordance with certain guarantees under federal law. Specifically, the class alleged that they suffered harm when their applications seeking loan forgiveness were denied because the defendant failed to complete and return required loan verification certifications (LVCs) within 10 days. According to the class, the defendant allegedly “admitted that it failed to return LVCs within the time period mandated by law,” and in 2019 had entered into consent orders with the CFPB and NYDFS, “in which it conceded that it had failed to do so.” (Covered by InfoBytes here and here.) The complaint alleges several claims, including violations of New York General Business Law, breach of contract, and breach of the implied covenant of good faith and fair dealing.