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NSLDN files merits brief in Seventh Circuit, opposing preemption of state consumer protection laws

On June 25, 2018, NSLDN filed a brief in the U.S. Court of Appeals for the Seventh Circuit in Nelson v. Great Lakes Educational Loan Services Inc., No. 18-1531. NSLDN represents the Plaintiff-Appellant for purposes of the Appeal.

This case presents the issue of whether a student loan borrower can use state consumer protection law to remedy deceptive, unfair, and fraudulent acts and practices of a student loan servicer. In December 2017, the U.S. District Court for the Southern District of Illinois held that such claims were expressly preempted by federal law, insofar as the Higher Education Act preempts states from applying “disclosure requirements” with respect to federal student loans. Under the holding of the District Court, student loan borrowers are therefore barred from seeking relief under state consumer protection laws for unfair, deceptive, and fraudulent acts and practices.

The case has far reaching consequences for both borrowers and state attorneys general seeking to enforce state consumer protection laws. The District Court’s opinion was cited by Secretary DeVos and the U.S. Department of Education in a March 2018 “Notice of Interpretation” in a far reaching assertion that state consumer protection laws are preempted by the Higher Education Act. That Notice and the policies stated therein widely criticized by a bi-partisan group of state attorneys general. For additional coverage of this issue see here and here.

On July 2, 2018, friend of the court briefs, known as amicus briefs, were submitted by numerous parties in support of the position asserted by NSLDN including by (1) Illinois Attorney General Lisa Madigan; (2) a coalition of non-profit organizations, represented by the National Consumer Law Center, that work on behalf of students and student loan borrowers, consumers, low-income individuals, and civil rights; and (3) the Center for Responsible Lending and the U.S. Public Interest Research Group Education Fund.

On August 1, 2018, appellee Great Lakes Educational Loan Services filed its brief in response.

On August 15, 2018, NSLDN filed a Reply Brief on behalf of the Appellant.

We will update this page with other filings and information, as available.