A District Court judge in Pennsylvania has approved a $3.65 million settlement in a class-action lawsuit involving convenience fees charged by a student loan servicer to consumers making payments.
The Background: The plaintiffs filed a class action lawsuit against the defendant, a student loan servicer, alleging the unlawful assessment of convenience fees on Perkins loan payments. These fees were charged for processing payments made online or over the phone. The plaintiffs argued that these fees violated state laws designed to protect consumers from unfair and deceptive practices.
- The members of the class are individuals within the United States who paid a fee to the defendant for optional payment services to make a Perkins student loan payment by telephone, Interactive Voice Response, or the Internet between December 6, 2018, through October 31, 2023.
The Settlement: The court granted final approval of the settlement, which established a $3.65 million fund to be distributed to the affected borrowers. This fund represents 25% of the total fees collected by the defendant from approximately 552,293 Perkins loan borrowers between December 2018 and October 2023.
- Each member of the class is due to receive about $20 as their portion of the settlement.
- The plaintiff’s attorney’s will receive one-third of the settlement amount, or $1.22 million.
- The court’s approval was based on several factors, including the complexity, expense, and likely duration of continued litigation; the positive reaction of the class to the settlement; and the thorough investigation and negotiations conducted by experienced counsel. The court found the settlement to be fair, reasonable, and adequate, offering substantial relief to the class members without the risks and delays associated with further litigation.
