Former For-Profit College Students Ask Federal Court to Void Student Loan Debt | Press Release
November 12, 2017
Department of Education Has Failed to Act on Thousands of Borrower Defense Applications Despite its Legal Obligations
NEW YORK – Two former students who were defrauded by a New York for-profit college are suing the Department of Education (Department) and a private lender to block the enforcement of their student loan debt, the Project on Predatory Student Lending and the New York Legal Assistance Group announced today. The suit is being filed because of the Department’s failure to act on thousands of borrower defense applications by former students whose debts it has the legal obligation to cancel.
The suit was filed today in federal court against the DOE and Navient by Tina Carr and Yvette Colon, two former students of the for-profit Sanford-Brown Institute in New York.
“The Department of Education and Navient have ignored Ms. Carr and Ms. Colon’s defenses to repayment, leaving them and thousands of other defrauded borrowers with rights but no remedies,” said Project on Predatory Student Lending director Toby Merrill. “Ms. Carr and Ms. Colon are legally entitled to have their loans from this predatory school cancelled. Instead, the Department has been playing games with the students it is charged with protecting, and is instead using its power to change the rules in favor of the predatory for-profit college industry.”
The lawsuit comes just as the Department convenes a second negotiated rulemaking committee in as many years on the subject of borrower defense. “What is happening today in Washington D.C. is nothing more than regulatory theater,” said Merrill. “The Department has shown that it has no intention to give cheated students a fair hearing.”
“Tina Carr and Yvette Colon did everything right. They submitted evidence — substantiated by the Office of the New York State Attorney General — that Sanford-Brown deceived them into taking out loans to get an ‘education’ that would never lead to gainful employment,” said Jane Greengold Stevens, Co-Director of NYLAG’s Special Litigation Unit. “Almost three years later, Ms. Carr, Ms. Colon, and too many other students are still suffering every day from damaged credit and the threat of collection on these unlawful loans. We had no choice but to go to court.”
Sanford-Brown, owned by Career Education Corporation (CEC), engaged in outright deception to induce Ms. Carr and Ms. Colon to enroll in its vocational programs. Both students entered programs in medical fields, only to find out after the fact that the school lacked the necessary accreditation and did not provide adequate training. Sanford-Brown also lied to Ms. Carr and Ms. Colon, and the general public, about its dismal track record in preparing students for medical vocations.
Unfortunately, Ms. Colon and Ms. Carr are not alone in having been defrauded by SBI. The Office of the Attorney General of the State of New York (“OAG”) pursued CEC for these deceptions, and found that CEC systematically cheated students like Ms. Carr and Ms. Colon. Although SBI representatives cited job placement statistics to Ms. Colon of 80 percent, the OAG found that the actual placement rate was only 26.1%. Further, the OAG demonstrated that CEC-operated schools like SBI committed widespread deception concerning programmatic accreditation, and failed to disclose that graduates generally could not transfer credits to legitimate schools. The OAG concluded that these practices violated New York’s consumer protection statutes.
In March 2015, Ms. Carr and Ms. Colon submitted defense to repayment applications to the Department of Education and Navient, invoking their right to cancellation of their loans based on Sanford-Brown’s deceit. Despite Ms. Carr and Ms. Colon’s clear legal entitlement to loan cancellation, the Department and Navient have refused to consider their defenses, leaving Ms. Carr and Ms. Colon to struggle—along with tens of thousands of other borrowers whose defenses the Department has ignored—with burdensome and insurmountable student loan debt.
While professing to process defense to repayment applications, the Department has undertaken a series of convoluted regulatory maneuvers to avoid cancelling their loans or acknowledging their rights. The Department has repeatedly delayed—and in this week’s rulemaking, will attempt to rewrite—a rule that would have clarified the process for borrowers like Ms. Carr and Ms. Colon to seek cancellation of fraudulent student loan debt.
Faced with the Department’s bad faith, and after almost three years of waiting, Ms. Carr and Ms. Colon are asking a federal judge to vindicate their right to be free of unlawful debt.
Tina Carr. Ms. Carr attended a Medical Assisting program at SBI, relying on SBI’s promise that its graduates had high rates of employment in their field of study; SBI would provide meaningful job placement assistance; and SBI’s credits were widely transferrable to legitimate higher education institutions. Only after incurring substantial student loan obligations, dedicating eighteen months of her life to SBI’s program, graduating with a 4.0 grade point average despite a period of homelessness during her studies, and diligently undertaking an ultimately unsuccessful job search, did Ms. Carr learn that all of these promises were false. After graduation, the only employment Ms. Carr could find was a part-time retail job paying little more than minimum wage, where she worked for almost four years to make ends meet. Ms. Carr is rightfully proud of her perseverance in obtaining her degree, but in all practical senses, that degree is worthless. Ms. Carr said:
I entered the SBI medical assistant program when the opportunity arose to pursue my dream of working in the medical field. Sanford-Brown’s program checked all my boxes—with the promise of an associate degree, eventual job placement, and the opportunity to pursue further education. Those dreams were dashed when the reality of Sanford-Brown’s representations came to light, and I realized all of my efforts were for naught. Sanford-Brown plunged me into lifelong debt, which I can never recover from and which has caused and still does cause me great mental anguish. It’s disgraceful that the Department of Education has sided with these predatory schools, and allowed them to make victims of thousands of students who were promised a career opportunity and had their dreams dashed as well. My hope is that this lawsuit will expose the harms caused by Sanford-Brown and other predatory for-profit schools, and will wipe the slate clean.
Yvette Colon. Ms. Colon chose SBI’s certificate program specifically because the New York campus claimed that it was programmatically accredited—a prerequisite for employment as a cardiac sonographer, which was Ms. Colon’s career goal. SBI held out that it had the requisite accreditation, when in fact it did not. Indeed, the licensing authority told Ms. Colon that her SBI credential did not qualify her to sit for the sonography exam. At this point, Ms. Colon had sunk her time and energy, and incurred substantial debt, to obtain a degree that did not help her in any way to actually work as a cardiac sonographer. To add insult to injury, SBI’s promises of job placement assistance never materialized. When she attempted to register at a community college, she learned that SBI had also deceived her by representing that its credits were transferrable, when they were not. To this day, Ms. Colon works in medical billing, the same field in which she worked before attending SBI. She struggles tremendously to repay her burdensome federal and private loans, which she took out based entirely on SBI’s deception. Ms. Colon said:
I entered the SBI program because I had a goal of becoming a cardiac sonographer. Unfortunately, everything that the school promised, turned out to be false. SBI‘s credits were not transferable and, even after I asked directly, it turned out that the program I entered wasn‘t properly accredited. SBI has left me and many other students with mountains of debt and no career path to dig ourselves out. Making this worse is that our own government has failed to step in to protect and help students, and that is why we are asking the court to act.
Established in 2012, the Project on Predatory Student Lending is the first legal services practice focused solely on representing former students of for-profit colleges. It litigates on behalf of low-income students and against the legal and financial conditions that allow the predatory for-profit college industry 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 U.S. Department of Education for its failures to meet its legal obligations to police this industry and stop the perpetration and collection of fraudulent student loan debt. It has also brought its clients’ experiences to bear on federal and state policymaking.
The New York Legal Assistance Group addresses the urgent and emerging needs of low-income New Yorkers with comprehensive free civil legal services, impact litigation, advocacy and community education. Its Special Litigation Unit works to protect the rights of vulnerable people including children with special needs, seniors, individuals with physical and intellectual disabilities, immigrants and defrauded consumers. The Unit’s For-Profit Schools Project advocates for improvements of the oversight of for-profit schools and seeks systemic relief for student loan borrowers.