FOLLOW US

A Pennsylvania federal judge announced Monday that she will grant final approval to a $3.65 million settlement involving Educational Computer Systems Inc. (ECSI) over improper payment fees on federally-backed student loans.

Class-Action Settlement Details

The class-action settlement will provide refunds to over 40,000 claimants for fees ECSI allegedly added to their loan payments. The lawsuit contended these "pay-to-pay" fees were illegal under various state and federal laws. Attorneys from Bailey & Glasser LLP and Tycko & Zavareei LLP will receive $1.2 million in fees from the settlement fund.

Pay To Pay Fees Ok : Judge's Approval

U.S. District Judge Patricia A. Dodge confirmed she would approve the settlement and the motion for attorney fees, administrative costs, and class representative awards. "I have heard and read all that I need to make a decision," Judge Dodge stated at the hearing in Pittsburgh. "You can expect both motions to be granted."

Allocation of Settlement Fund

The approved motions included $1.2 million for attorney fees, $10,400 in cost reimbursements, $10,000 to each of the four lead plaintiffs, and $195,150 for the settlement administrator. This allocation leaves approximately $2.2 million to be distributed among claimants on a pro rata basis, meaning those who paid more in fees will receive a larger share.

Pay To Pay Fees Ok : Background of the Case

The lawsuit, led by plaintiffs Rebecca Nguyen, Tamica Brewster, Kyle Strickenberger, and Michelle Caynor, claimed ECSI breached the terms of its federal "master promissory note" by charging "processing" or "convenience" fees for one-time payments online or by phone on federal Perkins loans. The plaintiffs filed their suit in late 2022, representing several sub-classes of borrowers impacted by ECSI's fees.

Nationwide Class Definition

The final settlement class includes anyone who paid ECSI processing fees via phone or online between December 6, 2018, and October 31, 2023. ECSI's records indicate there were over 537,000 potential class members, with the settlement fund representing about 25 percent of the $14.9 million in fees collected during the class period.

Pay To Pay Fees Ok : High Response Rate

Patricia Kipnis of Bailey & Glasser reported a high response rate of 7.45 percent, significantly above the 1 or 2 percent typically expected in class actions. The claims administrator successfully reached nearly all potential class members using emails and postcards.

Minimal Objections

Only two objections to the settlement were filed, with one resolved through additional information and the other withdrawing their objection to join the settlement class.

Effective Case Administration

Judge Dodge commended the effective administration and appropriate litigation of the case, stating, "I appreciate this fair and equitable settlement."

Pay To Pay Fees Ok : Legal Representation

The plaintiffs and the settlement class are represented by Patricia M. Kipnis of Bailey & Glasser LLC and Kristen G. Simplicio, Hassan A. Zavareei, and Glenn E. Chappell of Tycko & Zavareei LLP. ECSI is represented by Ryan L. DiClemente and Thomas F. Cocchi Jr. of Husch Blackwell LLP.