Dieffenbacher v. DeVos

Overview

Sarah Dieffenbacher, who attended a Corinthian-owned school in California, sued the Department of Education after it unfairly and illegally tried to garnish her wages to collect on debts that should have been cancelled. In fact, Ms. Dieffenbacher had already asked the Department to cancel the debts four times over two years, and the Department ignored the substance of those requests when trying to take her earnings. Ms. Dieffenbacher is represented by the Project on Predatory Student Lending and the Legal Aid Foundation of Los Angeles, in the Central District of California

Background

In 2007, Ms. Dieffenbacher started a paralegal program at Everest College-Ontario Metro, in Ontario, California. Everest was part of Corinthian Colleges, Inc., a notorious chain of for-profit schools that shut down and filed for bankruptcy in 2015 amidst extensive state and federal investigations and lawsuits about Corinthian’s fraud. Everest lied to Ms. Dieffenbacher about every aspect of the program - her job prospects after attending, its career assistance, its program quality and career training, the transferability and usefulness of its credits, and its program cost. Ms. Dieffenbacher borrowed about $50,000 in federal student loans to attend. After graduating from Everest, Ms. Dieffenbacher was unable to find a job she had trained for and quickly fell behind on her loan payments. As a mom of four, she needed all of her income to support her family.

In 2015, Ms. Dieffenbacher applied for a loan discharge because of her school’s misconduct. In 2016, Ms. Dieffenbacher was notified that her wages would be garnished to pay her student loans. Ms. Dieffenbacher objected and requested a hearing. In January 2017, the Department of Education denied Ms. Dieffenbacher’s objection and ordered her wages garnished. The Department told Ms. Dieffenbacher that if she disagreed with its decision, she could bring a lawsuit in federal court to get it reviewed. On February 23, 2017, Ms. Dieffenbacher filed a lawsuit in federal court challenging the Department’s wage garnishment decision and asking for an emergency order to stop the garnishment from taking place until her case was heard.

After Ms. Dieffenbacher filed her case, the Department agreed not to garnish her wages while the case is pending. Despite the Court’s order on June 9, the Department continues to refuse to acknowledge that Ms. Dieffenbacher’s loan is invalid. In light of the Department’s continued obfuscation and delay, Ms. Dieffenbacher asked the court to proceed quickly with her case. On October 31, 2017, the court ruled that Ms. Dieffenbacher’s case should move forward and the Department filed an answer on November 20, 2017.

Case Updates

Update | In a Second Rebuke to Department of Education, Federal Court Refuses to Relinquish Case of Corinthian Borrower

In its latest ruling on October 31, 2017, the United States District Court for the Central District of California demanded that the Department of Education respond to the allegations of Sarah Dieffenbacher, a mother of four who was defrauded by Everest, a Corinthian Campus in California.

Update | AP Story Quotes LSC Attorney on Delay in Cancelling Predatory For-Profit College Loans

Tens of thousands of former students who say they were swindled by for-profit colleges are being left in limbo as the Trump administration delays action on requests for loan forgiveness, according to court documents obtained by The Associated Press.

Update | Court Orders Department of Education to Consider Student Loan Relief Application, Calling Request for Further Delay “Frivolous and in Bad Faith”

The United States District Court for the Central District of California issued an Order today that directs the Department of Education to rule on the loan relief application of a former Corinthian student that has been pending for over two years.  To date, the Department of Education has not ruled on thousands of applications for loan relief submitted by borrowers whose federal student loans were originated by private banks under the Federal Family Education Loan Program.

Dieffenbacher says the delay is costing her family dearly. “They should be protecting the students, because students were led to believe they were protected,” she said in an interview. “And they are not, they are protecting Corinthian Colleges and for-profit schools.”

Learn More

Case Documents

02/23/2017

Complaint

Plaintiff Sarah Dieffenbacher borrowed federal student loans to attend Everest College, a school operated by Corinthian Colleges, Inc.

05/15/2017

Opposition to Motion to Remand

Plaintiff, Sarah Dieffenbacher, strongly opposes remand of this fully ripe and justiciable case...

06/09/2017

Department of Education's Order Denying Motion to Remand

The Department of Education filed a motion for voluntary remand.

Coverage

Corinthian Students Will Only See Partial Loan Relief | Associated Press

The Department of Education has begun notifying some former Corinthian Colleges students that it will forgive only one-half or less of their federal student loans, even though the students were defrauded by the now-defunct schools, the Associated Press has learned.

Read More

Big Holdup for Borrowers Claiming For-Profit College Fraud | Associated Press

Tens of thousands of former students who say they were swindled by for-profit colleges are being left in limbo as the Trump administration delays action on requests for loan forgiveness, according to court documents obtained by The Associated Press.

Read More

Promised College Loan Forgiveness, Borrowers Wait and Wait | Associated Press

Danielle Ramos’ student-debt nightmare was supposed to be over. Like thousands of others who studied at failed for-profit colleges, she was promised by the U.S. Education Department under President Barack Obama that her federal loans would be forgiven by now. But as the weeks tick by with no reprieve, the 30-year-old college student fears the financial burden will force and her 4-year-old son to move back with her parents.

Read More