Legal Question in Legal Ethics in Wisconsin

Credit laws

ARE THERE ANY LAWS THAT PROTECT CONSUMERS FROM AN ERROR MADE ON A FEDERAL PARENT PLUS LOAN FOR COLLEGE EXPENSES? my husbad appled for a loan on line and the bank sent an approval letter first to the college approving the loan and then a denial letter to same college. However the only communication we received was a denial letter. The school sent us award letters stating that the loan was approved and that they processed the committment forms and sent info to bank yet after receipt of this bank sent back info of denial. Are they legally responsible to give my husband the loan or is the school at fault since they notified us and accepted the signed award requests, updated this info on web sights regarding my sons on line acct as well as allowed him to start school, move into schood housing and start meal plans and now after two weeks are requesting immediate payment and dropped my sons name from all the class roster he was enrolled in?


Asked on 8/28/07, 9:53 pm

1 Answer from Attorneys

JAY Nixon nixon law offices

Student Loan Approval Reversed, Detrimental Reliance Upon Initial Approval

Regrettably, I am not familiar with the federal "Parent Plus" program and I would need to research it in order to assist you. However, the law recognizes a doctrine known as detrimental reliance, which can enforce a promise made (and reasonably relied upon), but later withdrawn in certain circumstances. In all such situations, however, the victim of the misrepresentation would be legally required to mitigate damages. That means that you should take all possible steps to make other arrangements to avoid further damages. Although you should request all possible re-consideration by the denying agency (as well as other credit providers), if all else fails you should consider bringing your son home to avoid additional expense. The best you could probably hope for in a detrimental reliance recovery would be non-refundable deposits, moving expenses, lost opportunities, and other items which can no longer be recovered. You should also appeal to the University for installment options on tuition, etc., due to the circumstances, and look for other sources of income for your son, such as campus employment (if he is going to remain there). Letters from an attorney might help you in this scenario.

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Answered on 8/29/07, 8:25 am


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