Nelson v. Great Lakes | Student Defense: National Student Legal Defense Network

Nelson v. Great Lakes | Student Defense: National Student Legal Defense Network

On June 27, 2019, the seventh Circuit Court of Appeals dominated that student loan servicers may be held accountable below state shopper safety legal guidelines. The resolution in Nelson v. Great Lakes may have a significant affect on the way forward for student borrower protections and the extent to which the Trump administration can insulate servicers from efficient oversight.

“This decision is a victory for student loan borrowers and a powerful rebuke to the attempts by Betsy DeVos to shield student loan servicers from oversight,” stated Student Defense Vice President and Chief Counsel Dan Zibel, who argued the case earlier than the seventh Circuit. “Although Secretary DeVos has ignored rampant servicing misconduct and tried to bar the use of state consumer protection law against servicers, this ruling ensures that the courtroom doors will remain open to student loan borrowers and state attorneys general fighting on their behalf.”

Following the Court’s resolution, Dan co-authored an Op-Ed with former Illinois Attorney General Lisa Madigan, obtainable right here.


In this case, a student loan borrower sued the servicer of her federal student loans, Great Lakes Education Loan Services. The borrower claimed that Great Lakes marketed itself as an knowledgeable advisor providing to offer individualized recommendation in every borrower’s finest curiosity, however as an alternative systematically steered debtors into compensation plans that had been within the monetary curiosity of Great Lakes and to the detriment of the debtors.  Great Lakes asserted that student loan debtors shouldn’t have the best to make use of state shopper safety regulation to treatment these misrepresentations. The place asserted by Great Lakes received help from Secretary of Education Betsy DeVos, who has tried to insulate the loan servicers from state oversight and enforcement. In March of 2018, the Department issued a Notice of Interpretation arguing that state regulation of federal student loan servicers is preempted by federal regulation.  In asserting its place relating to the preemption of state shopper safety legal guidelines, the Department of Education has relied closely on the choice below enchantment on this case. The Opinion by the seventh Circuit famous that the Department’s interpretation was “not persuasive” as a result of it was “not particularly thorough.” 

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Many states have enacted shopper legal guidelines that give student debtors further safety from the servicers of federal student loans. Laws and supervision on the state degree can maintain servicers accountable after they give debtors the runaround by offering inaccurate or deceptive info, or in any other case treating debtors unfairly. Private corporations, comparable to Navient and Nelnet (now the mother or father of Great Lakes), service and acquire greater than $1.5 trillion in excellent loans from over 44 million debtors throughout the nation.  The Department of Education’s place – and the place advocated for by Great Lakes on this case – has been opposed by a bipartisan coalition of 25 state attorneys common, the National Governors Association (a bipartisan group representing the collective voice of all 50 state governors), and shopper advocates comparable to NSLDN.

Student Defense turned concerned on this litigation after an enchantment was filed, to offer knowledgeable authorized recommendation and technique on problems with preemption. On October 23, 2018, Student Defense Vice President and Chief Counsel Dan Zibel offered oral arguments earlier than the U.S. Court of Appeals for the seventh Circuit.