Department of Education Appeals Court Ruling in Attempt to Deny Debt Cancellation to Cheated Corinthian Students | Press Release

February 8, 2019

Thousands of Former Corinthian Students Are Eligible for Debt Cancellation;

With Latest Appeal, The Department of Education Continues To Resist Doing The Right Thing

 

San Francisco – At a court hearing today in the United States  Court of Appeal for the Ninth Circuit, the Department of Education continued to argue against granting full and complete loan cancellation to former Corinthian College students who were cheated by the for-profit college.

This hearing follows a major court ruling in May 2018 that invalidated the Department of Education’s policy of partially denying loan cancellation to certain former Corinthian Colleges students and that ordered the Department to immediately stop collecting from certain Corinthian students who have applied for loan cancellation. In yet another attempt to delay the case, today the Department is appealing this decision and is asking a different court to allow it to continue to disregard the rights of students who have been cheated by Corinthian by denying them the relief they are owed.

The Court is expected to issue a decision in the coming months.

“It has been four years since Corinthian shut down and the Department of Education determined that Corinthian was a fraud, yet the Department continues to do everything it can to delay justice for these students,” said Project on Predatory Student Lending Director Toby Merrill. “The Department has the power, and the legal and moral imperative, to cancel this illegal debt once and for all. We are pleased that the Courts, unlike the Department, are here to make decisions on the students’ claims.”

Thousands of former Corinthian students applied to have their loans cancelled after the school closed and have been waiting years for the Department of Education grant the relief they are due. There are still many thousands of former Corinthian students who are eligible for relief but have not yet applied for loan cancellation.

“Everest Institute robbed me of my education – I received nothing but a pile of debt from them,” said Amanda Kulka, a former student of the Corinthian-owned Everest Institute. “The Department of Education should be holding sham schools accountable, not fighting to make those of us who were cheated pay even more. Cancelling these loans won’t reverse all the harm they’ve already caused, but it would at least be a fresh start.”

A wide array of groups and individuals with varying constituencies and interests have weighed in on the appeal in support of the former Corinthian students, including the Lawyers’ Committee for Civil Rights, Debt Collective, the Legal Aid Community, and a group of state Attorneys General.

The case was argued on behalf of the students by Joshua Rovenger, an attorney with the Project on Predatory Student Lending. The borrowers are represented by the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School and Housing and Economic Rights Advocates (HERA).

“It’s an established fact that, for years, Corinthian sold lies to students looking for opportunity and left them with thousands of dollars in debt,“ said HERA Managing Attorney Noah Zinner.  “The law rightfully calls for these Corinthian debts to be cancelled, but the Department is inexplicably demanding repayment from former students who—if they are getting by—are doing it despite and not because of their experience with this predatory for-profit corporation.”

Elected officials and advocates have consistently pressured the Department of Education to do the right thing and cancel Corinthian debts. In October, the Project on Predatory Lending was joined by Senator Dick Durbin, Congressman Joe Kennedy, Attorney General Maura Healey, the Debt Collective organization and others to launch a public awareness campaign urging eligible students of former Corinthian Colleges (Heald, WyoTech, and Everest) to apply to have the Department of Education cancel their debts. They also forcefully urged the Department to cancel the illegal debt for all Corinthian students once and for all.

The Debt Collective organization said in a statement:  “A hostile and obstinate Department of Education has harmed an untold number of borrowers by refusing to cancel debts that everyone knows are fraudulent. Many former students have suffered irreparable financial consequences as a result, including being pursued by collections agencies, incurring penalties and fees, and having their wages garnished and their tax returns seized. Many others have damaged credit scores which can have a deep and lasting effect, including making it difficult to find stable housing and employment. Aside from an irrational desire to act belligerently towards students who did nothing more than try to get an education, there is no explanation for the Department’s refusal to follow the law and cancel all of these debts at long last.”

An online tool has been created to help students determine whether they are eligible to apply using a simple form. 

The case, Calvillo Manriquez v. DeVos, is a class action. Four former Corinthian students  represent a class of Corinthian borrowers nationwide who enrolled at a Corinthian-owned school during dates that vary by campus and program. The Project has created a web page with resources to tell former students of Corinthian-owned schools whether they are members of the class, and which form they should fill out to apply for loan cancellation.

 

Case background: Calvillo Manriquez v. DeVos

Under the Department of Education’s watch, Corinthian, the parent company to Heald, WyoTech, and Everest campuses, took in billions of dollars in taxpayer money and used boiler-room-style high-pressure tactics and racially-targeted advertising to build its business, all while producing outcomes for students so terrible that it had to lie to stay in business. Corinthian filed for bankruptcy, but the students it cheated were left thousands of dollars in debt for an education they never received.

In March, the Department notified some former students that because the average earnings of Corinthian students who attended their program were not less than half of the average earnings of some unspecified group of students who went to a different, non-Corinthian school, they must repay a portion of their invalid loans. In coming up with this murky and convoluted calculation, the Department secretly and illegally gathered information about borrowers’ earnings from the Social Security Administration. Perversely, the Department obtained the data from SSA pursuant to an information sharing agreement entered into for the purpose of protecting the public from predatory institutions like Corinthian by publishing “gainful employment” metrics.

In a groundbreaking May 26 decision, Judge Sallie Kim (N.D. Cal.) granted a preliminary injunction stopping the Department of Education from applying this illegal “average earnings rule” and ordered the Department to stop collecting on the plaintiffs’ loans. In response to that ruling, the Department refused to stop collecting from the thousands of borrowers hurt by its illegal actions and whose applications for relief it had adjudicated under its illegal rule, and only stopped collecting on the loans of the four named plaintiffs who represent the class in the case. The judge again rebuked the Department, rejecting its unreasonable and narrow interpretation of the May 26 ruling and clarifying that the order to stop collecting means that the Department must stop collecting loans from all individuals whose loans are tainted by Corinthian’s fraud.

On July 27, 2018, the Department appealed that decision to the Ninth Circuit Court of Appeals. The parties submitted their respective briefs to the Court in September and October 2018.

For more information about the case and the  preliminary injunction, click here.

 

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students and taxpayers.

The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.

About HERA

Housing and Economic Rights Advocates (HERA) is a California statewide, not-for-profit legal service and advocacy organization dedicated to helping Californians — particularly those most vulnerable — build a safe, sound financial future, free of discrimination and economic abuses, in all aspects of household financial concerns. It provides free legal services, consumer workshops, training for professionals and community organizing support, creates innovative solutions and engages in policy work locally, statewide and nationally.

 

 

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