When Michigan Finance Authority (MFA) terminated its “Michigan Students First” student loan program in 2010, Sommers Schwartz attorneys Jason Thompson stepped in to protect the rights of certain borrowers forced to pay higher interest payments as a result of the program’s cancellation. After prolonged class action litigation in both state and federal court, the case was recently settled.
Michigan Students First allowed qualifying borrowers to reduce their interest rates to 0% if they made 36 consecutive monthly payments and then continued to pay on time after the rate reduction. At the time the program was terminated on June 30, 2010, some 105,000 borrowers who had begun to make the required 36 timely monthly payments, but simply could not do so by the program’s termination date, were suddenly and unfairly ineligible for the rate drop.
Sommers Schwartz filed a class action suit to compel MFA to honor the interest rate reduction for the negatively impacted “Michigan Students First” borrowers. The class action alleged that MFA breached its own loan contract, and sought monetary damages for the plaintiffs.
After appeals to both the Michigan Court of Appeals and the Michigan Supreme Court, the parties reached an $11.5 million class action settlement agreement with payouts ranging from $100 to $1,200 to each borrower based on the original loan amount.
Further information, including the Settlement Agreement and other court filings, can be found at https://www.michiganstudentloansettlement.com.