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Seventh Circuit: Student Loan Borrowers Can Sue Servicers Under State Consumer Protection Laws

Friday, June 28, 2019
Mike Landis | Consumer Law & Policy Blog

Yesterday, a unanimous panel of the U.S. Court of Appeals for the Seventh Circuit issued an opinion in which it concluded that the federal Higher Education Act (HEA) does not preempt state law claims against student loan servicers. The case involves a student loan borrower who brought a putative class action against the loan servicer alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, and constructive fraud and negligent misrepresentation under Illinois common law. The district court granted the defendant’s motion to dismiss concluding that these state law claims were expressly preempted by the HEA.