Nelnet Lawsuit Claims Student Loan Servicer Grossly Miscalculated Monthly Repayment Amounts

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A proposed class action lawsuit alleges Nelnet has repeatedly miscalculated student loan borrowers’ monthly repayment amounts, effectively making it impossible for some to fulfill their repayment obligations.

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The 14-page Nelnet lawsuit summarizes that the student loan servicer has grossly overcalculated the amount due each month for certain borrowers while allegedly misrepresenting to credit reporting agencies that proposed class members owe the miscalculated monthly payments.

“The inflated, false monthly payments due reflect negatively on Plaintiff’s and similarly situated consumers’ credit profile and deter lenders from considering them for loan opportunities,” the suit emphasizes, alleging Nelnet is “well aware” that it has incorrectly calculated student loan borrowers’ monthly payments yet continues to report the inaccurate amounts to third parties.

According to the complaint, the plaintiff, a West Virginia resident, requested that Experian, Equifax and Trans Union “reinvestigate and correct” the inaccurate Nelnet trade line in her credit report, but Nelnet allegedly failed to reasonably investigate the consumer’s disputes and continued to incorrectly report the wrong amount on a monthly installment payment.

“Defendant Nelnet refused to acknowledge that it was calculating an improper amount, even after Plaintiff provided irrefutable proof,” the filing says.

As COVID-19-related student loan forbearance wound down, Nelnet was tasked with recalculating borrowers’ monthly payments, the case explains. The servicer and debt collector calculates repayment plans after a borrower selects from at least seven repayment options, with some income-driven repayment plans designed to help borrowers who cannot afford high monthly payments, the suit relays.

According to the complaint, Nelnet informs borrowers that their monthly payments in the Saving on a Valuable Education (SAVE) and Pay As You Earn (PAYE) plans will generally be 10 percent of their discretionary income.

Nelnet calculated that the plaintiff, who enrolled in a SAVE plan with a roughly $35,000 student loan balance and a gross monthly income of $5,833.32, owed a monthly student loan payment of more than $1,969, the lawsuit says, noting that 10 percent of the consumer’s monthly income would be just over $583.

The suit says the plaintiff in January of this year was denied a mortgage loan because Nelnet reported to credit bureaus that she was required to pay nearly $2,000 per month to the servicer. Per the case, the reported high debt ratio, in excess of the 50 percent debt-to-income limit, kept her from qualifying for the loan.

Though the plaintiff filed detailed disputes showing that her monthly repayment amount was miscalculated, Netlnet nevertheless verified her credit report to the reporting bureaus even as it placed her in “administrative forbearance” while it worked to retally her monthly payment, the filing states. The case accuses Nelnet of failing to reasonably investigate the plaintiff’s disputes.

“Instead, Defendant Nelnet permitted factually inaccurate payment amount information to be reported on Plaintiff’s account,” the complaint charges.

The Nelnet lawsuit looks to cover all consumers with West Virginia addresses who, within the applicable statute of limitations period, had or have loans serviced by Nelnet and for whom Nelnet calculated monthly payments for income-based repayment plans.

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