The backstory is pretty simple, like, back in 2022, a data leak happened with Nelnet, and things slipped out of the company’s hands, so eventually, that led to a lot of lawsuits being filed, and then, this whole thing became just a big Nelnet Class Action lawsuit. And now, after years of it being ongoing, there is a settlement. So let’s talk about that for a sec.
How Did The Breach Happen?
To get a good grasp of the lawsuit, you should first find out what exactly went wrong. It turns out that in June 2022, cybercriminals managed to break into a tool that was connected to Nelnet’s student loan servicing system, and that’s the very way how they got to the personal data of the borrowers. How personal? Well, we’re talking about data or details like names, Social Security numbers, and even loan balance details in some instances.
And the super surprising thing is that, even Nelnet wasn’t aware of this data leak for weeks, and that’s what made this whole situation even worse. And when they found out about it all, well, they sent out cautionary notices to those who could have been impacted by the breach. However, at that point, many borrowers were of the opinion that the damage had already been done.
That is when the legal issues began. Borrowers argued that their confidential information should have been adequately safeguarded from the very beginning. As they considered that the companies did not adequately protect them, few lawsuits were initiated which got merged into a single class action.
What Claims Did Borrowers Make?
The borrowers in the lawsuit claimed, in a very simple explanation, that the companies did not adequately safeguard their personal information.
They further claimed that as a result of the failure, hackers were able to obtain sensitive information that should have been kept secure.
Besides the financial aspect, borrowers mention the stress they experienced, their time was wasted, and they had to make efforts in monitoring their credit reports and financial activities more closely. If there were frauds or identity issues, these would lead to more out-of-pocket costs for the people.
The legal grounds for the claims involve inadequacy of data protection, failure to protect personal information, and breaches of certain consumer protection and privacy laws. But in plain language, the core issue remains the same. Borrowers are simply expressing that these companies were expected to secure their information but failed to do that effectively.
On the other side, companies have flatly denied that they did anything wrong. However, rather than having a long and costly courtroom fight, they consented to resolving the matter by settlement.
How Does The Settlement Work?
In this settlement proposal, $10 million is the total sum to be distributed amongst the parties. This sum is deposited to a single common settlement fund. However, it is crucial to realize that the entire sum does not end up with the borrowers as cash in hand. To begin with, a portion of this pot may be allocated towards attorney’s fees, settlement administration, communications and other approved expenses. Naturally, the court is the one to approve the expenses.
Subsequent to these expenses, the left-over sum will be distributed among the class members who qualify and also submit valid claim forms. This also has one significant implication: when the settlement is made, at the outset, a person’s exact amount is not determined. It is subject to how many claimants come forward and what kind of claims are presented.
Depending on the terms of the settlement, class members could request a reimbursement of the time spent on the matter, their direct losses, or even both. Thus, the amount that an individual may receive can vary. To put it simply, the more good claims that are submitted, the more the settlement amount is divided up.
