Six Months into 2020: Wins for Students and Fighting for Justice | UPDATE

July 6, 2020

The Project on Predatory Student Lending stands with the Black community and all who experience the effects of systemic racism. We will continue to fight the racism of for-profit colleges, which prey on people seeking economic opportunity and cheat them out of an education. By targeting Black communities, this compounds the effects of the entrenched, systemic racism that has unfairly disadvantaged some while advantaging others.

Learn more about the Project’s racial justice work here, and in our latest updates below.

 

Groundbreaking victory for students

On June 26, a federal judge ordered the Department of Education to cancel the student loans of all 7,200 former Corinthian Colleges students in Massachusetts.

It is a major victory and the first time a court has ordered a borrower defense discharge of federal student loans. More than eighty percent of students enrolled in Everest in the Commonwealth were women, and more than three in four students were Black or Latinx.

The Court instructed the Department to discharge the loans within 60 days. For more information, visit our case page. And see more coverage in the Boston Globe, Forbes, and MarketWatch.

 

Lawsuit reveals targeting of Black students

Students sued Florida Career College in April for its predatory and racist practices against Black students. Our clients bravely challenged the school for systematically targeting Black students with false advertising and lies, and providing a worthless product. After we filed the case, many current and former FCC staff shared stories of FCC’s horrifying and abusive practices with Republic Report.

FCC is one of the for-profit colleges that benefited most from the CARES Act, receiving $17 million in stimulus money to continue ripping off Black students.

 

Challenging nonsensical “partial relief rule”

In June, we filed Pratt v. DeVos, students challenged the Department of Education’s latest partial relief methodology for borrower defense.  Under the rule, the Department only cancels a small part of most successful applicants’ loans, and forces them to repay significant portions of their bogus student loan debt.

This is the Department’s second attempt at devising a “partial relief” methodology to deny loan cancellation to defrauded student borrowers. The first rule was enjoined in May 2018 in our case Calvillo Manriquez v. DeVos. The Department failed to comply with this order, landing Secretary DeVos in contempt of court with a $100,000 fine. The Department’s second formula suffers from many of the same flaws.

 

Students force Department of Education to decide all borrower defense claims

After years of delay and litigation, the Department of Education agreed to a settlement in Sweet v. DeVos that would force the Department to process the borrower defense claims of nearly 170,000 student borrowers within 18 months. Many of these were pending for over four years.

The proposed settlement is an important step that will finally give students decisions on their borrower defense claims. We will keep fighting for the complete loan cancellation that cheated borrowers deserve and to ensure that borrowers’ rights are respected. For more information about the settlement click here.

 

Fighting the DeVos borrower defense rule

In February, we challenged Secretary DeVos’ borrower defense rule, which went into effect on July 1st. We filed the case, NYLAG v. DeVos, with our partners at Public Citizen on behalf of the New York Legal Assistance Group. The complaint details how this rule imposes impossible standards for defrauded students seeking loan cancellation and eliminates critical protections for students. The rule is unlawful and will not stand up in court.

 

A “Perfect Storm”

As reported in the New York Times, this pandemic has created a “perfect storm” to allow for-profit colleges to thrive. Students targeted by for-profit schools are the same people who are suffering the most during this health and economic crisis. The challenges facing our clients are far from over. We will continue to speak out and fight for our clients in court.