June 6, 2013

Students Seek To Enforce Zero-Percent Student Loan Contracts Against Michigan Finance Authority In New Federal Lawsuit

Two student loan borrowers who were eligible for the zero-percent interest contractual benefit known as “Michigan Students First” filed a class-action counterclaim against the Michigan Finance Authority (MFA) in federal court. The students are being represented by Hank Law in Lansing, Michigan and other law firms located in Michigan and California.

On May 31, 2013, two student loan borrowers who were eligible for the zero-percent interest contractual benefit known as “Michigan Students First” filed a class-action counterclaim against the Michigan Finance Authority (MFA) in federal court. Initially, the MFA filed suit against Hans Kiebler and Donovan Visser in state court in May, alleging that the students’ potential claims “abruptly halted the refinancing transaction” of nearly $650 million in debt, resulting in a potential cost of $54.2 million, if the dispute is not resolved. In response, the students removed the case to federal court and filed a class-action counterclaim on behalf of the thousands of other students affected by the MFA’s conduct. The students are being represented by Hank Law in Lansing, Michigan and other law firms located in Michigan and California.

The lawsuit charges the MFA with breaching student loan agreements. The lawsuit seeks to enforce the zero-percent contractual benefit, or alternatively, for the MFA to pay compensation to the aggrieved borrowers. The lawsuit was filed in U.S. District Court for the Western District of Michigan, and is cited as Michigan Finance Authority v Kiebler et al, 1:13-cv-00597-JTN.

Since January 1, 2003, the Michigan Students First program has reduced student loan interest rates to zero-percent for all borrowers that made thirty-six (36) months of on-time loan payments. “According to a February 12, 2010 Treasury Department memorandum written by Ben McGuire, as many as $500 million in Michigan college student loans were MSF-eligible when the MFA unilaterally terminated the program without reason or notice,” noted Jeffrey Hank, a Lansing attorney representing students in the lawsuit (1). Because so many students are affected, class-action certification is being sought by the named representatives.

In June of 2010, the MFA unilaterally revoked the zero-percent interest rate, causing harm to borrowers already struggling in a tough job-seeking economic climate with a widely recognized student loan burden unparalleled in American history (2). "Our suit alleges that the MFA broke its contract and violated students’ trust," said Caleb Marker, another attorney representing affected students. Nearly any student who obtained student loans before June 2010 and has made on-time payments could be affected.

Current and former participants in the program who wish to learn more about this lawsuit or to report their experiences may review the lawsuit online at http://www.MichiganStudentLoanLawsuit.com. Or they may contact Attorney Jeffrey Hank at (855) 426-5529 (or e-mail: students@consumerpractice.com) or Attorney Caleb Marker at (562) 216-7387.

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