A settlement has been reached in a whistleblower class action lawsuit brought against Nelnet Inc and Nelnet Educational Loan Funding Inc, Southwest Student Services Corp, Brazos Higher Education Authority and Brazos Higher Education Service Corp, and Panhandle Plains Higher Education Authority and Panhandle Plains Management and Servicing Corp. They are accused of improperly inflating interest rate subsidies from the Department of Education.
The settlement details are as follows: Nelnet Inc. and Nelnet Educational Loan Funding Inc. have paid $47 million to the United States. Southwest Student Services Corp. has paid $5 million. Brazos Higher Education Authority and Brazos Higher Education Service Corp. have paid $4 million. Panhandle Plains Higher Education Authority and Panhandle Plains Management and Servicing Corp. have paid $1.75 million. The whistleblower will receive a total of $16.65 million from these settlements.
The United States did not intervene in this whistleblower case that was filed in September 2007. The allegations were that several lenders participating in the federal student financial aid programs created billing systems that allowed them to receive improperly inflated interest rate subsidies from the Department of Education.
