Student lender Netlet said today that it has agreed to pay a $55 million settlement, resulting from a whistleblower case that was set to begin trial on Tuesday, but was delayed by the judge so as to facilitate settlement talks.
Whistleblower Jon Oberg helped discover in 2006 that several student lenders had been receiving an erroneously high return on loans through a program that was supposed to have been phased out in 1993, according to the Omaha World Herald. As the whistleblower for the case, he will earn portion of the damages.
The Netlet case is part of a larger lawsuit that alleges over $1 billion in overpaid returns by the federal government to nine lending companies. Netlet allegedly received $407 million in overpayments. Had they lost in trial, those damages could have been substantially increased. Another defendant in this case is Sallie Mae.