Great Lakes Educational Loan Services has faced multiple class action lawsuits from borrowers who claim the company either overapplied their payments, capitalized interest during forbearance periods, or mishandled loan servicing in ways that increased their loan balances unexpectedly. If you’ve paid extra toward your Great Lakes student loans only to see your balance remain stubbornly high, or if you entered forbearance and your principal suddenly increased, you may have been affected by one of these documented practices. The company has already settled at least one major case—the Bland v.
Great Lakes debt collection settlement—for $1.275 million, signaling that federal courts have found merit in borrower complaints about how Great Lakes manages accounts. Multiple cases are still active, and the scope extends beyond just overpayment issues to encompass broader loan servicing failures. These class actions represent one of the clearest opportunities for borrowers to recover money directly from Great Lakes if their accounts were mishandled. The key to determining your eligibility is identifying which specific practice affected your loans and whether you fall within the relevant class period.
Table of Contents
- What Are the Great Lakes Student Loan Class Actions and How Do They Differ?
- How Interest Capitalization During Forbearance Affected Borrowers’ Loan Balances
- Payment Misapplication and How Excess Payments Were Allegedly Mishandled
- Debt Collection Violations and the Bland Settlement
- CARES Act Credit Reporting Damage and Pandemic-Era Mishandling
- PSLF Misrepresentation and Borrower Eligibility Confusion
- How Borrowers Can Verify Their Eligibility and Next Steps
- Conclusion
What Are the Great Lakes Student Loan Class Actions and How Do They Differ?
Great Lakes faces simultaneous class actions addressing distinct servicing failures, though they often overlap in impact on borrowers’ accounts. The Bland v. Great Lakes settlement, already resolved, addressed debt collection violations under the Massachusetts Consumer Protection Act—the company allegedly called borrowers more than twice in a seven-day period about debt collection without authorization. This settlement of $1.275 million applied only to Massachusetts residents during the specified class period, illustrating how some Great Lakes cases are geographically limited while others are nationwide.
The settled nature of this case provides a roadmap: if a similar violation occurred in your state, separate litigation may be possible. The remaining active cases address what borrowers consider the core servicing problems: what happens to money when you send it in and how loan balances are calculated during special forbearance periods. The Witz case, for example, alleges that Great Lakes’ website promised excess payments would first reduce accrued interest, then pay down the highest-interest loan’s principal, but borrowers report this didn’t occur. Similarly, the Dawson case certified a class of borrowers who received B-9 administrative forbearance and had interest capitalized onto their principal balance—a practice that effectively increases what you owe even though you’re in a protected status. Understanding which case applies to your situation requires reviewing your loan history and the specific practices you experienced.
How Interest Capitalization During Forbearance Affected Borrowers’ Loan Balances
The Dawson v. Great Lakes case centers on a practice that feels counterintuitive to most borrowers: during administrative forbearance, interest continues to accrue on student loans, but Great Lakes allegedly added (or “capitalized”) that accrued interest directly to your principal balance rather than keeping it separate. If you had a $50,000 balance when you entered forbearance and $3,000 in interest accrued over the forbearance period, you might reasonably expect to exit with $50,000 owed plus $3,000 in accumulated interest. Instead, borrowers report seeing a balance of $53,000 as the new principal, meaning every future interest calculation is based on that higher number. The U.S.
District Court of Western Wisconsin found the case strong enough to certify a class, meaning a judge agreed sufficient evidence existed that this happened to enough borrowers that a collective lawsuit made sense. The practical damage compounds over decades. If capitalizing $3,000 in interest increased your principal by 6 percent, and you have 20 years of repayment ahead, you’re paying interest on interest—a phenomenon that can add thousands of dollars to your total repayment obligation. This case is still ongoing, but the certification decision suggests borrowers in the class have a meaningful chance of recovery. One limitation to note: you must have received a specific forbearance type (standalone B-9 administrative forbearance) during the class period. Other forbearance types or more recent administrative forbearances may not qualify, so reviewing your loan documents is essential.
Payment Misapplication and How Excess Payments Were Allegedly Mishandled
The Witz case alleges something simpler but equally damaging: Great Lakes promised borrowers their extra payments would be applied according to a specific formula (interest first, then highest-rate loan principal), but failed to honor that promise. Imagine you owe $10,000 on two loans: a $6,000 loan at 6 percent interest and a $4,000 loan at 3 percent interest. You send an extra $500 payment. According to Great Lakes’ stated policy, that $500 should reduce the accrued interest owed first, then apply remaining funds to the highest-interest loan’s principal.
But borrowers filing the suit claim their extra payments were distributed differently—sometimes split equally between loans, sometimes applied to lower-rate loans first—resulting in them paying more total interest than they should have. This case involves claims of both common law fraud and violations of the Illinois consumer Fraud Act, which indicates the court found evidence that Great Lakes’ misrepresentation was knowing and intentional, not simply an administrative error. The case is still pending, but the fact that a federal court allowed these claims to proceed past the motion-to-dismiss stage means the allegations are not frivolous. A key limitation here is that some borrowers may have accepted the misapplication without realizing it occurred, since it happens silently in account records rather than generating an obvious notification. If you made extra payments and never received detailed documentation of how they were applied, you could be affected even if you haven’t identified the problem yourself.
Debt Collection Violations and the Bland Settlement
The Bland v. Great Lakes case, already settled for $1.275 million, addressed something more direct: repeated phone calls. The company allegedly initiated more than two telephone communications within a seven-day period regarding debt collection without authorization under Massachusetts law. To most borrowers, an extra phone call might seem minor, but the Massachusetts Consumer Protection Act treats repeated collection calls as a violation because they can constitute harassment.
The settlement is already paid, but it’s important for two reasons: first, if you’re a Massachusetts resident who received such calls during the class period, you may be entitled to a payment from the settlement; second, it demonstrates that federal courts found Great Lakes engaged in practices consumers and regulators consider problematic enough to warrant financial penalty. This settled case is geographically limited to Massachusetts, which is a significant limitation for borrowers in other states who experienced identical calling patterns. If you received excessive collection calls from Great Lakes while living outside Massachusetts, this settlement won’t help you, though similar state-specific consumer protection laws might provide an alternative remedy. The settlement also illustrates something important about Great Lakes’ servicing practices: the violations span from collection pressure through account management, suggesting systemic issues rather than isolated incidents.
CARES Act Credit Reporting Damage and Pandemic-Era Mishandling
A class action alleges that Great Lakes, along with major credit bureaus Equifax, TransUnion, and Experian, improperly reported student loan accounts during the CARES Act pandemic relief period (March 2020 through September 2023). The charge: Great Lakes reported payments as not made or accounts as delinquent even though borrowers were protected by the zero-interest, no-payment CARES Act relief. This created credit damage for millions of borrowers who were actually in compliance with the law. If your credit report shows late payments or delinquency marks from 2020-2023 on your Great Lakes loans, this case could directly address the false reporting.
The credit reporting case is broader than Great Lakes alone—it involves the credit reporting agencies’ role in disseminating false information—but Great Lakes’ role was providing inaccurate payment data to those bureaus. One major limitation: credit damage is often difficult to quantify and remedy after the fact. Even if reporting is corrected, credit scores sometimes recover slowly, and you may have lost favorable loan rates, missed credit approvals, or paid higher interest elsewhere because of the false reports. The case is still in progress, and the uncertainty about how damage will be calculated and paid means you shouldn’t rely on this settlement alone to address pandemic-era credit harm. If possible, obtain your credit reports and confirm the accurate reporting before the claim deadline passes.
PSLF Misrepresentation and Borrower Eligibility Confusion
The PSLF (Public Service Loan Forgiveness) misrepresentation case alleges that Great Lakes provided incorrect information about borrowers’ eligibility for the program and what repayment status qualifies toward forgiveness requirements. Public Service Loan Forgiveness requires 120 qualifying payments under an income-driven repayment plan while working in public service, but borrowers report that Great Lakes told them payments made under other plans counted toward forgiveness, or that they were eligible when they weren’t. This is particularly damaging because borrowers might have spent years making payments that didn’t actually count, only discovering the shortfall when they applied for forgiveness.
For example, a borrower working as a teacher might have received advice from Great Lakes that their payments under the standard repayment plan were qualifying payments, then learned years later that only income-driven plans counted. The lost time means they’d need to restart their forgiveness accumulation under the correct plan. This case involves multiple loan servicers, and Great Lakes’ specific role was in the misinformation provided to borrowers about their eligibility and payment counts. A critical limitation: proving you received specific misinformation from Great Lakes can be challenging without contemporaneous emails or call recordings, so if you have documentation of what a representative told you, preserve it carefully.
How Borrowers Can Verify Their Eligibility and Next Steps
To determine if you’re eligible for any of these cases, start with your Great Lakes loan documents and your account history. For the interest capitalization claim (Dawson), review your loan status during any administrative forbearance periods—specifically, check if you had B-9 forbearance and whether your balance increased at the end of that forbearance without a corresponding payment from you. For payment misapplication (Witz), request your full payment history from Great Lakes and examine how extra payments were distributed; if they don’t align with their stated policy, you have potential grounds. For the CARES Act credit reporting case, pull your credit reports from all three bureaus and look for late or delinquent marks during 2020-2023.
Document everything: collect your loan statements, any correspondence from Great Lakes, payment history printouts, and notes about calls or conversations with representatives. These documents become critical evidence if cases proceed to settlement or judgment. Keep in mind that class action settlements are not automatic payouts—you typically need to file a claim within a specified deadline window, and the deadline can pass without notice if you’re not monitoring the case. Setting a calendar reminder to check on case status quarterly is a practical step that many borrowers overlook, resulting in missed recovery opportunities.
Conclusion
Great Lakes Educational Loan Services faces significant class action litigation over multiple loan servicing practices, from debt collection violations (already settled in Massachusetts) through ongoing cases alleging interest capitalization, payment misapplication, credit reporting errors, and PSLF misinformation. The company’s practices have been scrutinized by federal courts, and at least one settlement has already paid borrowers $1.275 million, indicating that regulators and courts view these practices as genuine violations. Your eligibility depends on your specific loan history and which practice affected your account, but affected borrowers could recover thousands of dollars through settlements.
Take action by reviewing your loan statements and payment history, documenting any discrepancies you identify, and monitoring the status of active cases. Most lawsuits maintain settlement websites or are tracked through case management systems, and claiming your recovery typically requires submitting proof of your class membership within specified deadlines. If you suspect you’re affected, don’t assume Great Lakes will contact you—settlements don’t reach borrowers automatically, and deadlines are firm. Visit the case-specific websites linked in the verified facts, gather your documentation, and file a claim if you qualify.