Fight Over Student Loan Fees Goes to Court

     SAN DIEGO (CN) — A student loan marketer sued its loan servicer, claiming it formed a competing company to steal clients in the $1.2 trillion student loan debt business.
     The Student Loan Project sued Student Loan Service in Superior Court on Friday, alleging fraud, fraudulent transfer, breach of contract and negligent misrepresentation.
     The Project claims the Service stopped paying it the 50 percent of the monthly maintenance fee to which it is entitled for customers it brought in who contracted with Student Loan Service.
     The Project claims it brought the Service 3,200 students who signed up and are paying $39 a month in maintenance fees, for which the Project has been getting $63,000 a month.
     But on Feb. 18, the Project says, the Service told it that it “would no longer accept qualified prospects into the program under the marketing agreement with plaintiff effective as of that same day, and that plaintiff was to stop its marketing efforts, due to a shift in regulatory enforcement of the student loan servicing industry.”
     The marketing fee was to be paid over the life of the loan, which could be 20 years or more, according to the complaint.
     The alleged contract breach did not come out of nowhere, the Project claims. It says Student Loan Service has formed a new company called Docupop.com, which it is using to re-contract with the borrowers the Project brought in.
     On April 11, Student Loan Service informed the Project that all of its marketing fee payouts are “done,” though the Service is still “retaining, servicing and collecting maintenance fees to which plaintiff is entitled under terms of the marketing agreement,” according to the complaint.
     The Project says its access to the Service’s website processing portal was also abruptly cut off, denying it access to information to monitor accounts under the marketing agreement.
     Student Loan Service charges for its services, which are not required for student loan borrowers to apply for loan consolidation and repayment assistance, as the Department of Education offers similar programs for free.
     The defendants are Libre Technology dba Student Loan Service and Antony Murigu.
     The Student Loan Project is represented by Todd Verbick, who declined to comment.
     Student Loan Service did not return a telephone request for comment.

%d bloggers like this: