Secretary Devos Denies Students’ Rights To Full Debt Cancellation

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Students, Project on Predatory Student Lending Speak Out Against New Formula That Subjects Defrauded Student Borrowers to Unlawful Loan Collection

BOSTON –United States Education Secretary Betsy DeVos announced that she will deny full student loan cancellation to student borrowers who were cheated by their colleges and applied to have their federal loans cancelled. This announcement comes despite defrauded students’ legal right to have their loans fully cancelled as a result of their school’s misconduct.

The Department’s action sends hundreds of thousands of student borrowers into the holiday season with the fear that their bogus loans may not be discharged and that they may face collections from the Department of Education.

The following is a statement from Eileen Connor, legal director of the Project on Predatory Student Lending at the Legal Services Center of Harvard Law School, on the new rule.

“Anything less than full loan cancellation for students cheated by for-profit colleges is invalid. Under law, cheated students have the right to have their loans fully cancelled. This partial denial scheme will force thousands of families to pay fraudulent debts that never should have existed in the first place. It shows that the Department of Education will stop at nothing to try to extract payments on invalid debts and deny students their rights under law.”

The following are statements from former for-profit college students affected by today’s announcement

Alicia Davis, Former Corinthian College student

“The whole idea of partial relief implies that we got a partial education, which is just false. Not only did I not receive an education from Corinthian, I’ve had to work ten times harder for years just to overcome the damage that school did to my career and finances. It’s been proven with evidence that Corinthian was a fraud and the law says that students do not have to pay fraudulent loans. We’ve already been scammed by our school, we’re not going to let the Department of Education scam us now too.”

Samuel Hood, Former ITT Tech Student

“I was a student at ITT Tech in Tennessee and it became very clear that it was a complete fraud of a school. I studied computer networking with the hopes of becoming a network security officer, but I left with a diploma that was essentially garbage and had no ability to pursue that field. For Secretary DeVos to make this announcement as we head into the holiday season adds insult to injury for all the students like myself who were scammed by for-profit colleges and should not be forced to pay for any of this debt.”

Prior to January 20, 2017, the Department of Education provided full loan cancellation for certain Corinthian borrowers who submitted a simple attestation form. Upon taking office, Secretary DeVos stopped issuing loan cancellation and instead attempted to deny full cancellation to these borrowers, who had already been found eligible for complete relief. In May 2018, in a landmark decision, a federal judge enjoined the use of this rule. Despite the court order, Secretary DeVos continued to collect on the debts of over 16,000 former Corinthian students, including by taking wages and tax refunds. As a result, in October 2019, Secretary DeVos was found in contempt of court. Then just this week, we learned that that the scope and harm to students was significantly greater than the Secretary had reported. The Department has now acknowledged that it attempted to collect on over 45,000 people, nearly tripling the number previously disclosed. The Department has still not returned all the money owed back to students.

Meanwhile, the Department has also refused to process any borrower defense claims for well over a year, leaving the more than 200,000 students who applied for borrower defense with no answers and mounting debt. Those students sued Secretary DeVos and the Department of Education in June 2019 in Sweet v. DeVos, demanding that the Department process their applications for debt cancellation. Nearly 900 defrauded former for-profit college students submitted testimony in the lawsuit, with 96% reporting that their lives were worse now than before they went to school. Students also reported that carrying debt and not knowing when it would be cancelled has caused significant financial harm and emotional stress. Many have had their wages garnished, tax refunds seized, and credit destroyed.

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students.

The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.