Pratt v. DeVos

Overview

Who Is Involved In This Case?

Student borrowers filed this case against the U.S. Department of Education. They seek to represent all borrowers who have had or will have the Department of Education’s partial relief rule applied to them. The students are represented by the Project on Predatory Student Lending and Public Citizen Litigation Group.

 

What Is This Case About?

This case challenges the partial relief methodology for borrower defense introduced by the Department of Education in December 2019. The partial relief rule applies to people whose borrower defense applications are granted because their school cheated them. Under the rule, the Department only cancels a small part of most people’s loans, and forces them to repay significant portions of their bogus student loan debt.

The rule uses a deeply flawed methodology, basing relief only on the average earnings of graduates of the applicant’s program, rather than considering any evidence of the harm suffered by students from their schools’ misconduct.

This is the Department’s second attempt at devising a “partial relief” methodology that denies most relief to defrauded student borrowers. The first rule was enjoined in May 2018 after a federal court concluded that the Department had violated a federal law called the Privacy Act in creating its partial relief formula. A judge ordered the Department to stop using the formula and to stop collections on all class members. However, the Department failed to comply with this order, and collected on over 45,000 borrowers, which landed Secretary DeVos in contempt of court with a $100,000 fine.

This lawsuit follows a recently-proposed settlement in the lawsuit Sweet v. DeVos, in which the Department agreed to finally begin deciding the borrower defense claims of nearly 200,000 student borrowers who were cheated by their schools and have been waiting for relief.

 

Where Was This Case Filed?

This case was filed in the United States District Court for the District of Columbia.

 

When Was This Case Filed?

This case was filed on June 9, 2020.

Why This Case?

Federal law allows students to cancel their federal student loans when the school they attended misled them. Since taking office, Secretary DeVos has made multiple failed attempts to subvert this law and block loan cancellation for students.

The Department’s most recent attempt at “partial relief” is another scheme to deny loan cancellation to defrauded students. When borrowers apply for relief, they must answer questions about how their school’s actions harmed them. Instead of evaluating the information that students have submitted, under this new rule, the Department ignores the evidence and is using “average” earnings of all graduates of the borrower’s program to determine the amount of relief available to every successful applicant who attended that program.

The Department claims its formula is based on statistics, but ignores basic statistical principles. The Department claims its formula measures value, but calculates the value of an education solely on a cohort’s earning ability. Moreover, the formula does not take into account the countless factors that go into a cohort’s earnings, many of which have nothing to do with the education that students received from predatory schools.

“The Department of Education recognizes that I was defrauded by this school, but because of a ridiculous formula, I only get 10% relief. It’s insulting. I have worked hard to succeed despite all the harm that Everest caused to my life and career. I am not looking for a handout. I just want accountability and a process that is fair for everyone”

-Sammia Pratt

Case Documents

Complaint

On June 9, 2020, Plaintiffs filed a Complaint against the Department of Education.

Coverage

Scammed Borrowers Sue Betsy DeVos, Alleging She Illegally Limited Student-Loan Cancellation | Market Watch

Students who’ve been scammed by their schools are being illegally cheated again — this time out of the loan cancellation that they’re entitled to, a new lawsuit alleges. A group of student-loan borrowers filed a class-action lawsuit Tuesday accusing Secretary of Education Betsy DeVos and her department of illegally limiting the amount of relief student-loan borrowers who were misled by their schools receive.

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New Lawsuit Over DeVos’ Partial Loan Forgiveness Policy | Politico

Consumer groups this morning are filing a new legal challenge to DeVos’ policy, announced last year, that will cancel only part of the loan debt owed by federal student loan borrowers who are defrauded by their college.

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Education Secretary DeVos Sued Over Rule Related to For-Profit College Fraud | Yahoo Finance

The Department of Education (ED) changed its rules on how students defrauded by for-profit colleges seek debt relief, leading to lawsuits and a political fight to return the rule to its Obama-era form and a veto from President Trump in support of the change. Now consumer advocates are suing over related, lesser known Trump administration student debt rule change in another attempt to obtain more relief for defrauded students.

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