Student lender Nelnet settles lawsuit for $55M

LINCOLN, Neb. (AP) — Student lender Nelnet has agreed to pay $55 million to settle a whistle-blower lawsuit that accused the company and nine other lenders of defrauding the U.S. government out of $1 billion.

Nelnet did not admit any wrongdoing as part of the settlement, which will affect the company’s third-quarter earnings.

A trial in the lawsuit filed by former Education Department researcher Jon Oberg had been scheduled to begin Tuesday.

Oberg filed the lawsuit in Virginia on behalf of the U.S. government as a whistle-blower. He says the lenders received an artificially high return rate for several years on some loans.

Nelnet says it was accused of receiving $407 million in improperly high returns, and if it had lost at trial, damages could have been tripled.