-
1 of 10
-
2 of 10
-
3 of 10
-
4 of 10
-
5 of 10
-
6 of 10
-
7 of 10
-
8 of 10
-
9 of 10
-
10 of 10
Banks file lawsuit against Dept. of Education over student loans
Archive
A number of banks and two associations of lenders, under the name Student Loan Finance Corp, filed a suit against the United States Department of Education, challenging the Department’s reduction of student loan fees.
The suit, filed Nov. 3 2000, came after The Department of Education implemented a one percent reduction in direct loan fees in 1999, and two borrower repayment incentives that came into effect in August of 2000.
Neil Eggleston, lawyer and spokesperson for the Student Loan Finance Corp says these initiatives give the government an unfair advantage over private lending institutions.
Eggleston also charges that then Secretary of Education Richard W. Riley was “using tax money to pay for loan discounts; congress banned him from doing that…”
In a Jan. 19 press release, The DOE fired back, saying “if the lenders succeeded in their lawsuit, the result would be to increase fees and costs to direct loan borrowers…”
Riley added “the interest rate rebates and loan fee reductions are part of an overall commitment to make college more affordable for students and parents…”
The department said, “all of its actions are authorized by law and fully consistent with congressional intent.”
Eggleston said that the members of the SLFC just want a “level playing field” to be able to offer competitive rates. He said the situation could be alleviated if the government offered to help fund the private loan organizations, and that “nothing we’re doing is going to cause any student to pay back money.”