Lawsuit Claims Nelnet Misled Borrowers into Believing Student Loans Were Federally Backed, Covered by CARES Act

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A proposed class action claims Nelnet has misled certain student loan borrowers into believing they had federally backed loans eligible for relief under the CARES Act.

In truth, proposed class members’ loans were actually private commercial student loans owned by banks, credit unions or other lenders, and ineligible for CARES Act relief, the case says.

Filed against Nelnet, Inc., Nelnet Diversified Solutions, LLC and Nelnet Servicing, LLC, the lawsuit out of Florida alleges the companies have violated federal debt collection law by misrepresenting their association with the Department of Education.

The plaintiff, a licensed attorney in Florida, says several of her student loans were transferred to Nelnet for servicing after graduation. Throughout the time Nelnet serviced the plaintiff’s loans, the company represented that it was associated with the Department of Education, according to the case.

In one instance, the defendants left on April 28, 2020 a voicemail on the plaintiff’s phone in which a representative stated:

Per the complaint, the plaintiff’s account was delinquent at the time she received the message because she believed certain provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act applied to her loan. The lawsuit argues the plaintiff’s belief that her loan was eligible for CARES Act relief was reasonable given she was told by Nelnet in a voicemail that the company was collecting loans on behalf of the Department of Education.

When the plaintiff called the defendants to inquire about why payment was due, she was told that because her loans were in the “D” loan block, they were actually private commercial student loans owned by a bank, credit union or other lender and therefore ineligible for relief offered under the CARES Act, the suit says.

“Clearly, the language involved in the voicemail is inaccurate, as the United States Department of Education has no involvement with the Plaintiff’s Student Loans,” the complaint reads.

The plaintiff looks to represent all student loan borrowers in Florida’s Middle District whose Nelnet account numbers begin with the letter D and who received voicemails alleging the defendant was calling on behalf of the U.S. Department of Education regarding that loan.

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