Massachusetts judge rules AG can bring suit against student loan servicer

Massachusetts judge rules AG can bring suit against student loan servicer

[JURIST] A judge for the Superior Court of Massachusetts [judicial website] ruled [order] that Massachusetts’ attorney general Maura Healey [official website] will not be barred by sovereign immunity from bringing a lawsuit against Pennsylvania Higher Education Assistance Agency (PHEAA) [official website], one of the largest servicers for student loans in the US.

Healey’s lawsuit alleges [Reuters report] that PHEAA “engaged in practices that have undermined a federal debt forgiveness program” by overcharging students and not allowing them to make monthly payments that count towards loan forgiveness. PHEAA claimed that it had sovereign immunity because it was established by the state of Pennsylvania as a “quasi-governmental agency.” The agency also claimed that Healey should have sued the Department of Education, with whom PHEAA is affiliated. However, the judge found that an earlier federal case coming out of Virginia did not grant sovereign immunity to PHEAA. Although the Department of Justice argued Healey could not sue the Department of Education, the judge ruled she could still sue PHEAA because the claim did not conflict with federal law.

On Twitter, Healey said [Twitter] of the ruling, “A victory for thousands of students and families in Massachusetts who were victimized by student loan servicers. Today’s decision allows us to continue our fight in holding these companies accountable.”

Last November, for-profit college graduates sought [JURIST report] loan forgiveness in federal court. In October Pennsylvania’s attorney general filed a lawsuit [JURIST report] against Navient over federal loan practices. In April, New York passed a law [JURIST report] offering free college tuition to residents.