Dieffenbacher v. DeVos

Case Outcome

After two years of litigation, Ms. Dieffenbacher’s loans were discharged through bankruptcy court. While she no longer has fraudulent debt from Everest College, the Department of Education did not meet its legal obligation to cancel her debt through the Borrower Defense claim she submitted. “Unfortunately, it was not a settlement that I can say I'm proud to have received,” Ms. Dieffenbacher said. “They found an easy way out.”

Overview

Who is involved in this case?

The Project on Predatory Student Lending and the Legal Aid Foundation of Los Angeles represent Sarah Dieffenbacher against the Department of Education. Ms. Dieffenbacher is a former student of Everest College- Ontario, a predatory for-profit college owned by Corinthian College.

 

What is this case about?

In 2015, Ms. Dieffenbacher submitted a Borrower to Defense application to the Department of Education to have her federal student loans cancelled because of Everest College’s deceitful practices and misconduct. In 2016, Ms. Dieffenbacher was notified that her wages would be garnished to pay her federal 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 Project brought this case to court to fight for the loan cancellation to which Ms. Dieffenbacher is entitled.

 

Where is this case filed?

This case was filed in federal court in the central district of California.

 

When was this case filed?

This case was filed on February 23, 2017.

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

Why this case?

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 in the field 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. The Department of Education was unfairly seeking to reduce that limited income and imperil her capacity to support her family, so the Project stepped in.

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.

Case Documents

First Amended Complaint

On July 16, 2018, Plaintiff filed a First Amended Complaint challenging the Department of Education’s decision to unlawfully garnish her wages and partially deny her borrower defense claim. Ms. Dieffenbacher ultimately seeks a declaration that her loans are entirely unenforceable.

Motion for Reconsideration

On May 21, 2018, Plaintiff filed a notice of and motion for reconsideration of the Court’s decision to grant the Defendant’s motion to dismiss with prejudice, asking the court to reconsider its decision that the case is moot or, alternatively, reconsider its decision to dismiss with prejudice.

Motion to Deem Facts in Plaintiffs First Amended Complaint Admitted

The Department of Education failed to respond to Plaintiff’s First Amended Complaint and Plaintiff therefore asked the Court to deem the facts in her complaint as admitted.

Coverage

Turning to Courts for Loan Forgiveness | Inside Higher Ed

Earlier this year, Sarah Dieffenbacher closed the book on a two-year legal fight with the U.S. Department of Education over her student loan debt. But the resolution was unsatisfying to Dieffenbacher. Instead of getting a ruling on the loan-forgiveness claim she filed for debt racked up at the former Everest College, the department discharged her loans through bankruptcy court.

Read More

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