Nelnet Student Loan Data Breach Settlement: Key Details

A federal judge will hold a hearing to review and decide whether to approve a $10 million settlement by Nelnet that could affect Texas student loan borrowers.

The lawsuit alleges the student loan servicer, Nelnet, failed to take reasonable steps to protect consumers’ personal information in a 2022 data breach.

The hearing is scheduled for May 5 at the U.S. District Court for the District of Nebraska. Complaints against Nelnet were filed Aug. 30, 2022, in the U.S. District Court for the District of Nebraska. In total, 23 plaintiffs from 16 states — including Texas — brought claims.

Why is there a class action lawsuit against Nelnet?

According to Nelnet, the company began notifying borrowers on July 21, 2022, about an incident involving a website used to access account information.

The company said it identified a vulnerability linked to the breach and took steps to secure its systems, block suspicious activity and fix the issue.

Nelnet also notified the U.S. Department of Education and launched an investigation with third-party forensic experts.

How will the court review the settlement?

According to the class action settlement document, the May 5 hearing will assess whether the agreement satisfies the legal requirements for approval.

"At the Fairness Hearing, the Court will consider whether the Settlement is fair, reasonable, and adequate. The Court will also consider whether to approve the requests for attorneys' fees and litigation expenses, and any Service Awards for Plaintiffs. If there are any objections, the Court will consider them at this time. We do not know how long the Fairness Hearing will take or when the Court will make its decision. The Court's decision may be appealed."

How would I know if I'm a settlement class member?

According to the official settlement, the court’s preliminary approval order provisionally defined the settlement class as all individuals in the U.S. whose personal information was compromised in the data security incident.

However, not everyone who meets this description will qualify as a settlement class member. The document directs those to see the section titled “Are There Exceptions to Being Included in the Settlement Class?” for details on exclusions.

What are the potential payouts?

Individuals whose personal information was exposed in the breach may qualify for up to $5,100 in cash compensation, as well as credit monitoring and identity protection services.

According to court documents, the settlement impacts an estimated 2,501,324 borrowers whose data was compromised.

What are the settlement options?

Here's what class members could do under the agreement:

• Credit monitoring and identity protection: Two years of services plus up to $1 million in identity theft insurance (estimated value about $187 per year)
• Out-of-pocket losses: Up to $5,000 for documented expenses tied to the breach, such as fraud losses, credit freezes or related costs
• Lost time compensation: Up to $100 for four hours of time spent resolving breach-related issues ($25 per hour)
• Pro rata cash payment: A share of remaining funds for those who do not file specific loss claims