USA Funds to Settle Suit on Loan Collection Fees

January 31, 2017

The former loan guarantor USA Funds has agreed to pay $23 million to settle a lawsuit that challenged the right of such agencies to collect fees from borrowers who had defaulted on loans but started repaying them. A federal appeals court sided with borrowers in a class action, and USA Funds appealed to the Supreme Court. After mediation, USA Funds agreed to refund the fees by lowering the outstanding balances of most borrowers and making payments to some. USA Funds announced late last year that it would sell its loan guarantee business to concentrate on grant-making activities.

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