Appeals court decides in favor of student loan borrowers

The U.S. Court of Appeals for the Seventh Circuit issued an unanimous decision Thursday that opens the door for student loan borrowers to sue their servicer when they’re misled or mistreated. The three-judge panel ruled in the case Nelson v. Great Lakes Education Loan Services Inc. that federal law doesn’t prevent the plaintiff Nicole Nelson, and the class that she seeks to represent from suing their student loan servicer under state law.

U.S. PIRG and the Center for Responsible Lending had filed an amicus brief in support of the student loan borrower.

“Careless and often expensive mistakes from loan service providers exacerbate the student loan crisis, deepening the financial hole for cash-strapped students through no fault of their own,” said Kaitlyn Vitez, U.S. PIRG’s higher education campaign director. “State attorneys general and private attorneys should take the Nelson decision as a green light to defend student loan borrowers in the absence of federal action.”

“This decision is a win not just for Nicole Nelson, but also for millions more students across the country who’ve experienced these costly mistakes,” said Mike Landis, U.S. PIRG’s litigation director. “This opinion makes clear that student loan borrowers who are mistreated and mislead by their servicers have recourse under state consumer protection law.”