Key Hearing Scheduled for Monday on Department of Education’s Continued Attempts to Deny Complete Debt Relief to Former Corinthian College Students | Press Release

June 1, 2018

Hearing Follows Last Week’s Preliminary Injunction Preventing Department from Collecting Debts Based on “Average Earnings Rule”

SAN FRANCISCO – A court hearing is scheduled for Monday, June 4th involving the Department of Education’s continued refusal to grant full and complete loan cancellation to former Corinthian College students who were cheated by the for-profit college.

This hearing in the case of Calvillo Manriquez v. DeVos follows last week’s groundbreaking decision in the case, in which a  judge granted a preliminary injunction stopping the Department of Education from applying its “average earnings rule” to cheated former students of Corinthian Colleges, and preventing the Department from further collecting on the plaintiffs’ loans. The court found that the Department had clearly violated federal law by gathering applicants’ information from the Social Security Administration and using it to partially deny Corinthian borrowers’ applications for loan discharge. In that decision, the court announced it would consider whether to order the Department to award complete loan cancellation to Corinthian students and whether to order the Department to reveal certain documents. Monday’s hearing will address those considerations.

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).

In its brief filed yesterday, the plaintiffs argued:

  • Yet again, the Department is going out of its way to obfuscate facts in its attempts to avoid cancelling the loans of Corinthian students.
  • The Court has the authority to order the Secretary to produce all documents that show that complete cancellation was the Department’s prior rule.
  • Based on the Judge’s decision, the Department should go back to its prior practice of completely discharging the  loans of Corinthian borrowers.

The hearing is scheduled at 2:30 PM at the United States District Court for the Northern District of California, Courtroom A, 15th Floor, 450 Golden Gate Avenue, San Francisco.

Case Background: Calvillo Manriquez v. DeVos

Under the Department’s watch, Corinthian 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 and its debts were discharged, 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 their average earnings 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 their 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. For more information about the recent 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.

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.