Student Lender Nelnet Agrees to Pay $55M Settlement

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Following investigations conducted by the US government, student lending firm Nelnet on Friday agreed to pay at least $55 million settlement.

One of the biggest student lending companies in the United States, Nelnet, announced on Friday that it has agreed to pay some $55 million settlement over accusations of fraud committed against the US government.

Under the settlement, Nelnet agreed to pay $55 million to the US government over a whistle-blower lawsuit, which accused the company and nine other student lenders of defrauding the government more than $1 billion.

Also, as part of the settlement, Nelnet will not admit any wrong doing.

The case stemmed from a lawsuit filed by former Education Department researcher Jon Oberg, who accused the Nelnet, along with nine other student loan companies, of receiving an artificially high rate of return for the past several years.

Based on the investigations, authorities found anomalous transactions being conducted by the companies, which have been profiteering from students through a program that was supposedly, have been phased out in 2003.

Oberg helped the government to gather information about the transactions and other evidences on the overpayments.

Should the Department of Justice and the District Court agree on the settlement, Nelnet’s third-quarter earnings will be sliced.

Meanwhile, the court has cancelled all the scheduled hearings to give way for the talks between the government and Nelnet.

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Student Lender Nelnet Agrees to Pay $55M Settlement

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