News Alert: Nelnet Reaches Tentative Agreement in 9.5 Case

The student loan company Nelnet announced late Friday afternoon that it has reached “an agreement in principle” to settle a Federal False Claims lawsuit filed against the corporation and five other lenders that engaged in a scheme to bilk taxpayers by systematically overcharging the government for subsidy payments on federal loans they made to students. The lawsuit, brought by by Jon Oberg, the former Department of Education researcher who uncovered the 9.5 student loan scandal, has sought the return of approximately $1 billion to the government in overpayments these lenders improperly received.

According to a news release Nelnet put out at around 4:30 p.m. on Friday, the Nebraska-based lender has agreed to pay $55 million to settle the case. The bulk of the money will go back to the federal government. The company said that it was pleased with the deal, as it will not be admitting any wrongdoing.

It appears that Oberg has also reached tentative agreements with the other lenders in the case as well. About an hour before Nelnet issued its release, John F. Anderson, the federal judge presiding over the case, issued an order canceling the trial, which was scheduled to get under way in the U.S. District Court for the Eastern District of Virginia on Tuesday.

Higher Ed Watch will be off for the next two weeks for summer break. But when we get back, we will dig deeper into the court documents to try and resolve at least some of the remaining unanswered questions surrounding the scandal.