Former Corinthian Students Claim Victory at the Department of Education’s Debt Cancellation Announcement | Press Release

June 2, 2022

WASHINGTON, D.C. – Today, the Department of Education announced that it will cancel all federal student loans from Corinthian Colleges, the chain of for-profit colleges known for scamming and defrauding borrowers.

The announcement comes seven years after the Department of Education formally acknowledged Corinthian’s fraud and that borrowers were owed loan cancellation, and five years after borrowers filed the class action lawsuit Calvillo Manriquez v Cardona (previously DeVos) demanding that the Department cancel their fraudulent loans. 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).

“This is a tremendous student victory, and it belongs to the tens of thousands of borrowers who were cheated and abused by Corinthian Colleges,” said Eileen Connor, Director of the Project on Predatory Student Lending. “They never stopped fighting – over three administrations – for the justice they deserve under the law. Today, their voices were finally heard, and we would like to thank the Biden-Harris Administration for taking this decisive action. This is also not the end of the journey: there remain hundreds of thousands former students of for-profit colleges like ITT Tech and Art Institute who equally deserve to be freed from student debt. We will not stop fighting until their loans are canceled as well. So we celebrate today, but are back to work tomorrow.”

The fight to cancel Corinthian student debt began in 2014, when a group of Corinthian students joined with the Debt Collective. They organized the nation’s first student debt strike and helped establish borrower defense to repayment as a path for defrauded borrowers to have their student loans canceled.

“This is long overdue but it is the right thing to do. None of this debt would have been cancelled if it hadn’t been for former Corinthian students getting organized and going on a debt strike, and for the tireless work of the Project on Predatory Student Lending,” said Thomas Gokey, co-founder of the Debt Collective. “This announcement also sets the stage for future group-wide discharges for other for-profit schools including ITT Tech and Art Institute, and for broad based cancellation of all student debt. The Corinthian debt strikers were willing to join a debtors union to fight for themselves and for millions of people they didn’t know. If you are one of the people who benefits from any debt cancellation the Biden administration grants in the coming months, you should know about the Corinthian 15 and what they did to make THAT possible.”

Nathan Hornes and his sister Natasha both attended Corinthian Colleges’ Everest Institute campus in Los Angeles and were among the first debt strikers. Nathan’s loans were canceled in 2017 through borrower defense, but Natasha’s did not make it through the process to cancellation — until today.

“Corinthian was an absolute joke of a school. I had teachers who were students the semester before. One class had us play monopoly for hours as a final. And they were constantly lying and pressuring us to sign paperwork to take out more loans,” said Nathan Hornes, former Corinthian Borrower. “The debt strike was our only way to fight back and I’m so proud of what we accomplished. Having my loans canceled changed my life — I was finally able to get an apartment and car in my own name, and my mental health improved so much without that debt stress. My sister and all the others who went through the same experience of being cheated by Corinthian finally get to experience the same relief of having the financial burden lifted. They deserve that too, and I’m so glad that today they finally get to feel that freedom, and we will keep pushing so that everyone cheated by their school is able to have their day of justice that I felt.”

“Our clients have fought long and hard for this victory today,” said Joe Jaramillo, Senior Attorney at HERA. “These borrowers were targeted and scammed by Corinthian and then left to face a hostile Department of Education that ignored their rights at every turn. They helped strike down unfair and illegal partial relief rules and even held Secretary DeVos in contempt of court for illegally collecting on their loans. With today’s announcement, the Department of Education is committing to the law and to supporting the people who have been overlooked and ignored by our government for far too long, and that is a victory for us all.”

 

Calvillo Manriquez v. Cardona (previously DeVos) Case Background:

Corinthian took in billions of dollars in taxpayer money and used boiler-room-style high-pressure tactics and racially-targeted advertisingto build its business, all while producing outcomes for students so terrible that it had to lie to stay in business. Corinthian filed for bankruptcy and avoided its debts, but the students it cheated were left thousands of dollars in debt for an education they never received.

Between 2015 and 2016, the Department informed certain former students that they were eligible for a full loan discharge on account of Corinthian’s misconduct. However, in March 2018, the Department notified these students that because their average earnings were not less than half of the average earnings of an unspecified group of students who went to a different, non-Corinthian school, they had to repay a majority their loans. In coming up with this calculation, the Department secretly and illegally gathered information about borrowers’ earnings from the Social Security Administration.

In May 2018 and again in June 2018, a federal judge rebuked the Department of Education for its wrongful and illegal attempts to collect on the debt of students who were defrauded by Corinthian Colleges, ruling that the Department must stop collecting on the loans of tens of thousands of Corinthian students.

In September 2019, the Department and DeVos admitted in a court filing that it violated this court order by continuing to illegally collect on the student debt of thousands of former Corinthian students. In October 2019, Secretary DeVos was found in contempt of court for her actions. In December, the Department introduced another “formula” to deny full relief to cheated borrowers, very similar to the approach challenged in this case. The arbitrary partial relief formula was rescinded in March 2021 by Secretary Cardona.

 

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. 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.