Great Lakes student loan class action survives dismissal attempt

Great Lakes student loan class action overview:

• Who: A federal judge allowed a class action lawsuit against Great Lakes Educational Loan Services Inc. to move forward.
• Why: The judge determined the plaintiff’s claims that Great Lakes misled borrowers about how it would automatically apply payments were sufficiently pleaded.
• Where: The Great Lakes class action lawsuit was filed in Illinois federal court.

A federal judge ruled this week that a class action lawsuit accusing student loan giant Great Lakes Educational Loan Services Inc. of misleading borrowers about how it would automatically apply payments above their monthly minimums owed can move forward.

U.S. District Judge John F. Kness ruled to allow two claims of the lawsuit to move forward while trimming an unjust enrichment claim from the complaint, reports Law360.

Kness ruled that Great Lakes “does not definitively show at this stage that a class action cannot be maintained consistent with the class allegation.”.

Great Lakes student loan borrower Jeffrey Witz claims he was misled by a statement on the company’s website that said if he gave his servicer more than the minimum payment sum he owed every month, Great Lakes would automatically apply those funds to, first, interest accrued since his payment and second, the principal of his loan with the highest interest rate.

Witz claims he later learned none of his excess payments was going toward interest he had accrued since his last payment, according to the Great Lakes student loan class action lawsuit.

Great Lakes student loan borrower claims policies inconsistent

Witz argues he was told by Great Lakes that, since he had recently paid off one of his loans and was applying excess payments to a different loan, he would have to pay off all the interest on the loan he was currently paying down before any of his excess payments would be applied to the principal.

“This is not consistent with the representations on Great Lakes’ website which states that any excess payment is applied first to interest accumulation since the last payment and then to principal,” Witz argues in the Great Lakes student loan class action lawsuit.

Witz alleges Great Lakes is guilty of common law fraud and violating Illinois’ Consumer Fraud and Deceptive Business Practices Act.

In other higher education news, claims are currently open for a $284 million settlement to resolve class action allegations that certain prestigious universities shared information about financial aid offers through the 568 Presidents Group, allegedly allowing schools to limit the financial aid students received while inflating the costs of attendance.

Have you ever had a student loan serviced by Great Lakes? Let us know in the comments.

Witz is represented by Daniel A. Edelman, Tara L. Goodwin and Caileen M. Crecco of Edelman Combs Latturner & Goodwin LLC.

The Great Lakes student loan class action lawsuit is Witz v. Great Lakes Educational Loan Services Inc., Case No. 1:19-cv-06715, in the U.S. District Court for the Northern District of Illinois.

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