Facts

In June 2010, the Michigan Finance Authority, a division of the Michigan Department of Treasury, notified thousands of student loan borrowers that the Michigan Students First program was being discontinued and that students who made 36 months of on-time payments on their students loans would no longer be eligible for 0 percent interest.

After filing notices of intent to file claims, the Michigan Finance Authority sued borrowers Hans Kiebler and Donovan Visser in Ingham County Circuit Court. The borrowers then filed a class action counterclaim that was ultimately pursued in the Court of Claims in Ingham County Circuit Court. After a new Court of Claims was created by statute in 2013, the case was transferred.

COUNTER-CLAIMANTS' CONTENTIONS:
Defendant student loan borrowers contended that the Michigan Students First program was not a contract and that the borrowers did not file a notice of their claims within one year of the accrual date as required under the Court of Claims Act.

COUNTER-DEFENDANT'S CONTENTIONS:
Michigan Finance Authority contended that the Michigan Students First program was an enforceable contract and that the borrowers' claims did not arise until performance was due under the contract, after making 36 on-time payments.

Result

The borrowers' counter-claim settled for $11.5 million.

Other Information

Nearly 65,000 student loan borrowers will share in a total settlement of $11.5 million. JUDGES: Ingham County Circuit Court Judge Clinton Canady III, and Michigan Court of Claims Judge Michael J. Talbot. MEDIATOR: Jon R. Muth, Belmont, Mich. FILING DATE: May 30, 2013.