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Students Say Lenders Cheated|On Loans After Hurricane Katrina

BIRMINGHAM, Ala. (CN) - A class action claims that college lenders placed students' loans in forebearance after Hurricane Katrina without notifying students, but continued to collect monthly payments and refused to contribute money paid in excess of principal to reduce the principal, but claimed that the students had forfeited that money by paying it while their loans were in forebearance. The class accuses Access Group, National City Bank, Key Bank USA, and AES Graduate Loan Center of fraudulent concealment and conspiracy.

The students also claim that after they made late payments, the defendants illegally "increased the principal balance of the loan," apparently by charging penalties that violate terms of the notes, and the law.

The class seeks damages for fraudulent concealment, fraudulent misrepresentation, negligence, wantonness, breach of contract, conversion, unjust enrichment, money had and received, breach of other implied contracts, and conspiracy.

They are represented in Jefferson County Court by J. Timothy Francis.

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