A District Court judge in Nebraska has given final approval to a class-action settlement against a student loan servicer and awarded more than $11 million in attorney’s fees.
The Background: The defendant, Navient Solutions, had previously agreed to forgive $54 million in unpaid private student loans and pay back members of the class an additional $28 million after it was accused of forcing individuals to repay student loans that should have been discharged through bankruptcy.
- The defendant allegedly failed to follow bankruptcy laws and continued to collect on the loans after individuals had filed for bankruptcy protection.
- Along with forgoing collections on the unpaid student loans, the defendant has also agreed to update the credit reports of those individuals to reflect their loan was subject to a bankruptcy discharge.
- The defendant has also agreed to updated its business practices to ensure that no collection activity will occur if these types of student loans are discharged in bankruptcy.
The Final Ruling: Attorneys for the plaintiffs had been seeking $14 million in fees and costs, while the defendant had countered that $5 million was an adequate amount.
- Deciding that the truth of how much to award the plaintiffs’ attorneys “lie somehwere in the middle” between the two figures, Judge Robert F. Rossiter, Jr. of the District Court for the District of Nebraska awarded the plaintiffs’ attorneys an amount that fit that description.
- What kept Judge Rossiter from awarding more to the plaintiffs’ attorneys was the precedent that could be set by giving them 50% of the settlement fund, saying that such a ratio “causes some concern.”
