Williams v. DeVos
Darnell Williams and Yessenia Taveras, former students of Everest Institute in Massachusetts, a campus of the now-defunct Corinthian Colleges, Inc., sued in 2016 to challenge the government’s decision to take their tax refunds to pay their defaulted federal student loans from the fraudulent Corinthian schools.
On October 25, 2018, a federal judge ruled that the Department of Education had illegally taken the tax refunds of Mr. Williams and Ms. Taveras without addressing the assertion, made by Maura Healey, the Attorney General of Massachusetts, that their loans are fraudulent and unenforceable. The Court directed the Department to consider and rule on the AG’s group application for borrower defense. This ruling confirms that the Department has an obligation to consider borrower defense applications submitted by States on behalf of borrowers. Further, it confirms that it is unlawful for the Department to certify defaulted student loan debts for collection by Treasury Offset (the seizure of federal benefits and tax refunds) while there is a pending borrower defense application.
Williams attended a massage therapy program at Everest Institute in Chelsea, Massachusetts. Mrs. Taveras attended a medical assistant program there. In 2015, Everest and its parent corporation, Corinthian, shut down amidst extensive state and federal investigations and lawsuits about Corinthian’s fraud. In 2016, the Department of Education illegally seized Mr. Williams’s and Mrs. Taveras’s federal tax refunds to pay their federal student loans from Everest Institute. As Mr. Williams’s and Mrs. Taveras’s experiences make clear, the government has been illegally seizing funds from borrowers who have defaulted on their loans from Corinthian schools, certifying the debts as legally enforceable even when the government has evidence or applications that the debts are not legally enforceable.
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. Mr. Williams and Mrs. Taveras are not the only Corinthian borrowers affected by the government’s refusal to stop seizing money from borrowers it knows were defrauded. In late 2016, Massachusetts Senator Elizabeth Warren released shocking information in a letter to the Secretary of Education, stating that the Department of Education is still seizing tax refunds and other payments to collect the student loans of over 30,000 former Corinthian students, many of whom have applied for discharge.
The attorneys general of California, Massachusetts, Illinois and New York have since filed similar lawsuits.
Project on Predatory Student Lending
Update | Judge Declares Department of Education’s Seizure of Corinthian Colleges Borrowers’ Tax Refunds Illegal
A federal judge ruled this week that the Department of Education illegally took the tax refunds of two former Corinthian College students to pay their student loans, without addressing the assertion that these loans are fraudulent and unenforceable. Now, the Department may not take their tax refunds unless and until it makes a reasoned decision…
Project on Predatory Student Lending
Update | Lawsuit Against U.S. Departments of Education & Treasury
A former student of Everest Institute filed a lawsuit yesterday in federal court to challenge the government’s continued collection of defaulted federal student loans from low-income people who borrowed in order to attend a school operated by the disgraced and defunct Corinthian Colleges chain.
See All Case Updates
The Department of Education's Opposition to Motion to Supplement
On December 15, 2017, the Department of Education filed an opposition to the motion to supplement.
Reply to Opposition to Motion to Supplement
On January 5, 2018, Plaintiffs filed their reply to Defendant’s Opposition to Motion to Supplement, trying to establish that its opposition had no grounds.
Order on Motions for Judgment
On October 24, 2018, the court denied the Secretary's motion for Judgment and vacated the offset for Williams and Taveras.
“We were all taught to trust education,” said (Ann) Bowers, former Corinthian student. “But trusting the Education Department put me in a bad situation.” Earlier this year, she said, she confronted department officials she blames for her plight. “I said, ‘I trusted you, and you let us down. You were supposed to be the gatekeeper. You were supposed to protect us. Instead you fed us to the wolves.’
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.
Feds Found Widespread Fraud at Corinthian Colleges. Why are Students Still Paying the Price? | The Washington Post
Nearly 80,000 students of defunct for-profit giant Corinthian Colleges are facing some form of debt collection, even though the U.S. Department of Education unearthed enough evidence of fraud to forgive their student loans, according to an investigation by the staff of Sen. Elizabeth Warren (D-Mass.).
The U.S. Government Is Collecting Student Loans It Promised to Forgive | Bloomberg
The Obama administration has been actively seeking loan payments from thousands of former students eligible for a debt-forgiveness program.