Bible v. United Student Aid Funds, Inc., 14–1806.

• Decision Date: 05 October 2015
• Docket Number: No. 14–1806.,14–1806.
• Citation: 807 F.3d 839 (Mem)
• Parties: Bryana BIBLE, Individually and on Behalf of the Proposed Class, Plaintiff–Appellant, v. UNITED STUDENT AID FUNDS, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

807 F.3d 839 (Mem)

Bryana BIBLE, Individually and on Behalf of the Proposed Class, Plaintiff–Appellant,
v.
UNITED STUDENT AID FUNDS, INC., Defendant–Appellee.

No. 14–1806.

United States Court of Appeals, Seventh Circuit.

Oct. 5, 2015.

E. Michelle Drake, Attorney, Anna P. Prakash, Attorney, Nichols Kaster, PLLP, Minneapolis, MN, for Plaintiff–Appellant.

Arnold Bradley Fagg, Attorney, Morgan, Lewis & Bockius LLP, Washington, DC, Bonnie L. Martin, Attorney, Amanda Couture, Attorney, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, IN, for Defendant–Appellee.

Before FLAUM, MANION, and HAMILTON, Circuit Judges.

On consideration of appellee's petition for rehearing and rehearing en banc, filed on September 1, 2015, no judge in active service has requested a vote on the petition for rehearing en banc, and all judges on the original panel have voted to deny the petition. Accordingly, the petition for rehearing is DENIED.

807 F.3d 840

EASTERBROOK, Circuit Judge, concurring in the denial of rehearing en banc.

If default on a student loan causes the lender to collect on a federal guaranty, the borrower must pay "reasonable collection costs" to curtail the expense to the Treasury. 20 U.S.C. § 1091a(b)(1). A federal regulation nonetheless provides that a borrower who signs (and complies with) a "repayment agreement," thus reimbursing the guarantor, need not add collection costs to the debt. 34 C.F.R. § 682.410(b)(5)(ii)(D).

Bryana Bible stopped paying her student loan but later agreed to a rehabilitation program, governed by 34 C.F.R. § 682.405, under which she paid $50 a month (not enough to cover even half of the monthly interest) in anticipation that she would eventually resume making full payments, after which the note would be sold to a new private lender. When signing the rehabilitation contract, Bible promised to pay collection costs that could not exceed 18.5% of her loan.^†

But when the holder of her note sought to recover those costs, Bible replied with this suit characterizing the effort as a form of mail or wire fraud and seeking millions of dollars in damages under RICO, even though the guaranty funds have not been repaid and the premise of § 682.410(b)(5)(ii)(D) has not been fulfilled. She contends that a rehabilitation agreement under § 682.405 must be treated the same as a repayment agreement under § 682.410 and that, by treating these two programs differently, United Student Aid Funds has committed thousands of federal felonies—at least one per borrower. Bible also contends that United Student Aid Funds must pay damages for breach of contract, even though her original loan agreement and her rehabilitation agreement permit the lender to assess collection costs. Reversing the district court, the panel held that Bible's suit may proceed on both the RICO and contract claims.

Each member of the panel wrote separately. The lead opinion, by Judge Hamilton, concludes that the addition of collection costs to a loan in rehabilitation is forbidden because every "rehabilitation...