Vara v. Cardona

Information for Borrowers

To find out more information about this case and how it impacts borrowers with federal student loans from Corinthian Colleges in Massachusetts, click the link below.

Case Outcome

The students won this lawsuit: the judge ordered the Department of Education to cancel the student loans of all 7,200 former Corinthian Colleges students in Massachusetts. This is the first time a federal court has ordered a borrower defense discharge of federal student loans.

The victory came nearly two years after students won the related case Williams v. DeVos, and the judge ordered the Department of Education to stop using tax offset to collect borrowers’ loans that were covered by the Massachusetts Attorney General’s borrower defense application. The ruling is a clear and powerful statement of the rights of student borrowers, and a resounding rejection of the Department of Education’s longtime refusal to recognize these rights and cancel fraudulent student loans.

The Latest

In a huge victory for defrauded students, on July 15, 2021, the U.S. Department of Education filed a motion dropping its appeal in Vara v. Cardona. This means that the Department must now comply with a federal court order giving full loan discharges and a favorable borrower defense decision to 7,200 former Everest Massachusetts students and their families. On August 10, 2021, the Department formally issued a decision announcing its intention to discharge the loans, provide refunds for amounts paid, and adjust borrowers’ credit scores.

 

Overview

Who is involved in this case?

The Project on Predatory Student Lending represents Ms. Vara and approximately 7,200 former Corinthian Colleges students in Massachusetts. against the Department of Education. Ms. Vara is a former students of Everest Institute in Massachusetts, a predatory for-profit college owned by Corinthian College.

 

What is this case about?

The lawsuit demands that the Department of Education grant the Massachusetts Attorney General’s borrower defense application and cancel the students’ fraudulent loans.

The lawsuit comes one year after the Department of Education was ordered to stop collecting on the borrowers’ loans because they were covered by a group borrower defense application that was filed by the Massachusetts Attorney General in 2015.

Not only did the Department of Education ignore the AG's group borrower defense and refuse to cancel these loans, it illegally seized Ms. Vara's federal tax refunds to pay her federal student loans from Everest Institute. Although the government has broad powers to collect defaulted federal student loans, it may not seize funds from borrowers when it knows that the defaulted student loan debts are not legally enforceable due to a school’s fraud.

 

Where and when was this case filed?

This case was filed in federal court in Massachusetts on October 22, 2019.

“We got cheated and are now struggling to repay tens of thousands of dollars of debt for a worthless degree. The Attorney General told the Department of Education four years ago that Everest ripped off students, but they obviously don't care because the Department has still been collecting on my debt and has even garnished my wages and taken my tax refunds. My life only got harder after Everest—the only upside is the strength of the other students I went to school with and that's why I'm standing up with them for what's right."

- Diana Vara

“Even when presented with irrefutable evidence of fraud and deception by Corinthian, Secretary DeVos continues to side with her allies in the predatory for-profit school industry, rather than follow federal law and provide our students with the relief they need to rebuild their lives. Together with the Project on Predatory Student Lending, we are suing to force the Department to do its job and cancel these loans.” 

- Massachusetts Attorney General Maura Healey

“I want to be optimistic, but I’ve been waiting for so long...Every cent is accounted for. I don’t do anything for myself. It all goes to providing my son with a good home and what he needs to have a good life. There is no extra money to pay these loans. Having them disappear and this burden finally lifted will make such a big difference in our life.”

Why This Case?

This case follows the October 2018 ruling in Williams v. DeVos, which acknowledged the Attorney General’s group borrower defense application as valid and laid the groundwork for Attorneys General across the country to apply for loan cancellation on behalf of students in their state who were cheated by predatory for-profit colleges. In the Williams decision, the judge not only found the Attorney General’s application to validly assert a borrower defense on behalf of all individuals who attended Corinthian’s Everest schools in Massachusetts, but also ordered the Department to consider the application, and to stop its aggressive collections by seizing borrowers’ tax refunds while the application was pending.

Case Updates

7,200 Borrowers Cheated by Corinthian Colleges to Finally Secure Debt Relief as Education Department Drops Legal Appeal | Press Release

Former for-profit college students today secured a long-awaited victory as the U.S. Department of Education filed a motion dropping its appeal in Vara v. Cardona (formerly Vara v. DeVos) and will comply with a federal court order to grant the Massachusetts Attorney General’s borrower defense application on behalf of 7,200 borrowers who attended Massachusetts Everest schools, which were part of the Corinthian Colleges chain. The decision sets the precedent that group borrower defense applications filed by state attorneys general on behalf of defrauded borrowers are valid and must be decided by the Department.

How Are Corinthian Students Still Waiting for Justice? | Blog

On Inauguration Day, tens of thousands of defrauded Corinthian Colleges borrowers will have spanned three different presidential administrations while waiting for their fraudulent debts to be cancelled. It’s been five years since the Department made this promise – and five years that borrowers, elected officials and advocates have been demanding the immediate cancellation of these debts – yet former Corinthian students remain in limbo, uncertain of what to expect next.

Borrowers Seek to Hold Secretary DeVos in Contempt of Court for Refusing to Decide Borrower Defense Application | Press Release

Student borrowers filed a motion to hold Secretary of Education Betsy DeVos in contempt of court for failing to comply with an order to decide the borrower defense application filed by the Massachusetts Attorney General on behalf of approximately 7,200 former Corinthian Colleges students in Massachusetts.

Case Documents

Motion to Enforce Judgment

Plaintiffs seek to hold Secretary of Education Betsy DeVos in contempt for failing to comply with an order to decide their borrower defense application.

Judgment for Plaintiffs

Ruling that the AG's DTR application was a valid borrower defense application for every Corinthian student in Massachusetts, and ordering the Department to discharge their loans.

Complaint

Plaintiffs' filed a Complaint against the Department of Education.

Coverage

Biden Administration Drops Appeal of Legal Decision Granting former Corinthian Colleges Students Debt Relief | Washington Post

A group of 7,200 former students of the defunct for-profit chain Corinthian Colleges will have their federal student loans canceled after the Education Department agreed Thursday to drop its appeal of a court order to clear their debts. The decision arrives more than a year after a federal judge ruled that the students in Massachusetts were entitled to a full discharge of their loans under a statute known as borrower defense to repayment. The Trump administration fought the order and brought the case to a standstill, but borrowers were hopeful the Biden administration would concede.

Read More

Student Loan Borrowers Perplexed by Biden Administration’s Continued Defense of Trump-Era Lawsuits | Washington Post

Amanda Kulka expected her six-year fight for student loan cancellation would be over by now. Powerful allies, including a state attorney general and a federal judge, agreed that she and other students in Massachusetts had been defrauded by the defunct for-profit chain Corinthian Colleges. The courts even granted all 7,200 of them a full discharge of their debt in June, rebuking former education secretary Betsy DeVos’s attempt to block their request for relief.

Read More

Judge Orders Betsy DeVos to Cancel 7,200 Scammed Borrowers’ Student Loans | MarketWatch

During most of the Trump administration’s tenure, the U.S. Department of Education, led by Betsy DeVos, has worked to limit student debt cancellation for borrowers who say they were scammed by their schools. The agency scored a win in that effort Friday, when Democrats failed to muster enough votes to override President Trump’s veto of a bill that would have overturned the Department’s approach to student debt cancellation under what’s known as the “borrower defense” rule.

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