Dist. Ct. erred in granting defendant’s motion to dismiss plaintiff’s class action, alleging that defendant, which services plaintiff’s federally-backed student loans, made misrepresentations regarding how plaintiff and others could proceed when experiencing difficulties in paying off said loans, and that said misrepresentations violated Illinois Consumer Fraud and Deceptive Practices Act. While Dist. Ct. found that plaintiff’s action was preempted by federal Higher Education Act (HEA), which prohibits state laws that mandate disclosure requirements concerning said loans, instant action concerned alleged affirmative misrepresentations, as opposed to failures by defendant to disclose certain information. As such, any borrower who reasonably relied on said misrepresentations to his or her detriment is not barred by HEA from bringing state-law consumer protection and tort claims against defendant-loan servicer.
Federal 7th Circuit Court
Civil Court
Preemption