In May 2008, a civil action suit was filed in Nebraska when concerns arose that Nelnet, which is a higher education lender, was illegally coercing students to apply for federal student loans. This lawsuit has reemerged after sealed court documents proved these concerns to be true.

JPMorgan and Citigroup conspired with Nelnet to allegedly receive financial student loan subsidies by making false claims and illegally recruiting more borrowers.

The lawsuit is currently underway against JPMorgan, Citigroup and Nelnet for violating laws against offering financial inducements under the federal Higher Education Act.

The lawsuit claims that Nelnet hired telemarketers to aggressively push the government product and use false advertising to get more applications, such as telling students they would save thousands of dollars in interest by applying to their loan program. From this illegal practice, Nelnet has obtained millions of dollars in federal subsidies on student loans.

This was not the first violation of the federal subsidy that Nelnet has faced. In 2007, the U.S. Department of Education agreed on a settlement which allowed Nelnet to keep $278 million in disputed profits after it faced a similar lawsuit. After this incident, the company signed agreements with state authorities promising not to offer incentives to students in need of loans. With the recent lawsuit filed in Nebraska, it is clear that they had no intentions of keeping their promise.

The government could have intervened in the suit, but declined. If the government won’t do something about this reoccurring issue, it is time for students to do something. You can get involved in our Student Over Banks campaign by going to: http://www.studentsoverbanks.org/