As part of its effort to "walk the walk" in doing what it can to advocate the ability of qualifiying student loan borrowers to consolidate thier student loans, OneSimpleLoan®, a student loan marketing and consulting firm, took the unprecedented action of filing a lawsuit as a lead plaintiff against Margaret Spellings, the Secretary of the Department of Education.  The lawsuit requested a temporary injunction of a ruling that disallows the two-step student loan consolidation process after March 31, 2006, rather than after June 30, 2006, when other student loan-related provisions of the recently-signed Deficit Reduction Omnibus Reconciliation Act of 2005 take effect.

Our lawsuit also challenged the constitutionality of the Deficit Reduction Act of 2005 (DRA). This legislation incorporated changes to many Federal government programs including the Higher Education Act, which contained the actual student loan consolidation changes we are fighting.

Due to the March 31, 2006 cut-off date, this ruling meant that these previously-consolidated loan borrowers have no recourse to lower their cost of borrowing, which can run into thousands of dollars over the life of the loan. They also cannot take advantage of reducing their monthly payments over a longer period of time.

The initial lawsuit was filed on April 18, 2006. Although the consolidation portion of our case was dismissed, our lawsuit was a victorious catalyst behind the June 15, 2006 repeal of the “single lender rule.” This repeal was approved as part of the Emergency Supplemental Appropriations Act (i.e., H.R. 4939). This repeal means that student loan borrowers can now consolidate their student loans through a variety of student lenders and will no longer be tied to their original lender. This allows borrowers to ‘shop around’ to take full advantage of the consolidation offers with the most favorable terms regardless of lender.

In early September, 2006, two major groups filed amicus ("friends-of-the-court") briefs in support of our efforts challenging the constitutionality of the Deficit Reduction Act. If the DRA is declared unconstitutional, the changes that it made to the Higher Education Act will be voided. Thus, the reconsolidation process would again be available to borrowers. The first amicus brief was filed on September 6, 2006 by the public advocacy group Private Citizen. This was followed two days later an amicus brief by members of the U.S. House of Representatives, all of whom serve on key Congressional committees.

Stay abreast about the details and press coverage about this lawsuit by clicking on the following articles:

Actual Lawsuit Filing Document OneSimpleLoan, et al. v. U.S. Secretary of Education, et al., 2006 Civ. 2979 (S.D.N.Y., filed Apr. 18, 2006)

Official OneSimpleLoan Press Release about the Filing

Additional Lawsuit Filings OneSimpleLoan, et al. v. U.S. Secretary of Education

Paul Simino Interview with Higher Education Washington Inc (HEWI)

Letter to Secretary of Education Margaret Spellings about Limiting Consolidation Options

House Democrats Urge Students and Parents to Consolidate Federal College Loans by July 1

Senator Hillary Clinton Calls For Student Borrower Bill Of Rights

Oldsmar Man Leads Student Loan Fight (St. Petersburg Times, 6/7/2006)

Consolidation Could Save on College Loan (BayNews9, 6/26/2006)

Rate Rise Spurs Student Loan Refinancing (Washington Times, 6/30/2006)

Actual Public Citizen Amicus Brief Filing in Support of OneSimpleLoan's Challenge of Deficit Reduction Act (9/6/2006)

Actual Amicus Brief Filing by Key Members of Congress in Support of OneSimpleLoan's Challenge of Deficit Reduction Act (9/8/2006)

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