Student Loan Borrowers Want Sallie Mae Class Action Lawsuit Certified

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Student Loan Borrowers Want Sallie Mae Class Action Lawsuit Certified

By Courtney Coren

Student loan borrowers who filed a class action lawsuit against lender Sallie Mae alleging that they were double charged late fees filed a motion Tuesday asking a federal judge in California to certify the class. The proposed class consists of at least 100,000 individuals all making similar claims.

The plaintiffs and Class Members in the Sallie Mae class action lawsuit are all individuals who signed promissory notes to borrow money on or after Jan. 1, 1996 to pay for their college education bills in California, according to the motion. 

The Sallie Mae student loan fee lawsuit was initially filed in March 2011 by California student Tina M. Ubaldi claiming that she was charged late fees twice by being asked to pay for late fees on top of daily accruing interest on the outstanding principle, in violation of California consumer protection laws.  

Chanee Thurston joined the Sallie Mae class action lawsuit in June 2013, saying she was also double charged late fees.

The plaintiffs claim they all signed similar applications, promissory notes, and disclosure notices regarding interest rates and late fees.

“All Sallie Mae Private Loans were made to materially similar loan agreements with national banks, and Plaintiffs and all Class and Subclass members were required to sign materially identical promissory notes,” the class action lawsuit states. “Uniform provisions within these notes regarded, among other things, the accrual of interest, the determination of the rate of interest, the amount of late fees, and choice of law provisions.”

Sallie Mae filed a motion to have the class action lawsuit dismissed. It said that Stillwater National Bank & Trust Co., the loan underwriter, was based in Oklahoma and therefore was not subject to California laws. SLM Corp., Sallie Mae’s parent company, borrowed charters from national banks and acted as the de facto lender, Sallie Mae explained in its motion. 

The California federal judge denied Sallie Mae’s motion for dismissal in August, saying that Sallie Mae did not prove that it wasn’t the lender in the class action lawsuit. 

The certification Ubaldi and Thurston are seeking is for the Class Members and two other subclasses. 

One is for the putative late charge subclass, which is for borrowers who were charged $1.3 million in late fees from March 2007 through 2012 for not making their payments within 15 days of the due date and were charged $5 or five percent of the payment, depending which was greater. This class could consist of 41,500 members.

The second one is the putative usury subclass for those who borrowed money from Sallie Mae after Jan. 1, 1996 and were charged more than 10 percent annually on their loans. This class could reach 75,000.

Ubaldi and Thurston argue that their lawsuit meets all the requirements for certification: numerosity, commonality, typicality, predominance, and superiority. 

The plaintiffs are represented by Maureen Davidson-Welling, Edward J. Feinstein, Joseph N. Kravec Jr., Wyatt A. Lison and Stephen M. Pincus of Stember Feinstein Doyle Payne and Kravec LLC, by Micahael D. Braun of Braun Law Group PC, Janet Lindner Spielberg and William J. Genego. 

The Sallie Mae Loan Fee Class Action Lawsuit is Tina M. Ubaldi et al. v. SLM Corp. et al., Case No. 3:11-cv-01320, in the U.S. District Court for the Northern District of California. 

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