Student Loan Lenders Hit with Class Action Lawsuit Over Fees

Student Loan Lenders Hit with Class Action Lawsuit Over Fees

By Courtney Coren

A California woman filed a class action lawsuit in federal court last week against a group of lenders, alleging that they charged student loan fees to thousands of students that were far greater than what was agreed upon, in violation of their contracts.

Plaintiff Tamara Berg, formally known as Tamara Gross, borrowed almost $60,000 in student loans from National City Bank from 2000 through 2002 to cover her tuition while attending law school at Yeshiva University in New York. She claims that Access Group Inc., PNC Financial Services Group Inc., and Kentucky Higher Education Student Loan Corporation (KHESL) charged her the 12.9 percent in interest to guarantee the loans — an amount did not represent the actual costs they incurred for the guarantee, or represent the amount of funds forwarded to the Education Resources Institute to guarantee the loan.

As a result, Berg allegedly overpaid her student loan, the class action lawsuit claims.

“Despite the clear language that guarantee fees up to 12.9 percent may be charged for all costs incurred, Ms. Gross was charged 12.9 percent of her loan amounts but that amount did not represent actual costs incurred for the respective guarantee,” the National City Bank loan class action lawsuit states. “Rather, the lender kept the money for itself in contravention of the express terms of the loan agreement.”

National City Bank issued a total of three loans to Gross for nearly $60,000, according to the student loan class action lawsuit. The loan contracts that Gross agreed to state that up to 12.9 percent in fees could be charged to Gross on behalf of the guarantor so that their costs were covered.

When Gross finished law school, the California woman received a bill from Access Group telling her to send monthly loan payments to the designated loan servicer, Kentucky Higher Education Student Loan Corp.

Gross sent Access Group over $25,000 in payments on her loans, however, she discovered that about $10,500 of that money went toward the costs of the guarantee fees — costs that were never accumulated, the class action lawsuit says.

Access Group then filed a lawsuit against Gross in a California court seeking money it said Gross owed the loan servicer for the loans. In response, Gross asked that Access Group provide proof that the loans had indeed been assigned to the company or that it was somehow an interested party. However, Access Group was did not provide any such proof, and the lawsuit was dismissed.

“Despite repeated discovery requests in the California litigation, Access Group failed to produce any assignments or other evidence supporting its allegation that lender National City Bank assigned its rights to the loan contracts to Access Group,” Gross’s lawsuit states.

An amended lawsuit was filed against Gross by Access Group, however, Gross states in her class action lawsuit she filed on Friday that there was still not evidence that Access Group was an interested party in her loans.

A motion was then filed by Gross requesting permission to file a counter-lawsuit against Access Group for trying to collect on loans when it was not an interested party.

PNC is actually “the successor-in-interest to National City Bank, having acquired National City Bank on October 24, 2008,” according to the lawsuit.

According to Gross’s class action lawsuit, Access Group officials admitted that the loans had no guarantees connected with them.

Access Group dropped its lawsuit against Gross that it had filed in a California state court.

Gross believes that tens-of-thousands of individuals were taken advantage of and unwittingly overpaid Access Group, which is why she is asking that her lawsuit be given class action status on behalf of all borrowers who entered into a loan contract with National City Bank and were improperly forced to make payments to Access Group or any other defendant who wrongfully charged, received or withheld guarantee fees or supplemental guarantee fees that did not represent actual costs incurred for a third-party guarantee of the loan.

The Plaintiffs are represented by Richard M. Golomb, Ruben Honik, and Kenneth J. Grunfeld of Golomb & Honik, PC and by Allen Carney and Randall K. Pulliam of Carney Bates & Pulliam, PLLC.

The National City Bank Student Loan Class Action Lawsuit is Tamara Berg v. Access Group Inc. et al., Case No. 2:14-cv-05980 in the U.S. District Court for the Eastern District of Pennsylvania.

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