Student Borrowers Harmed by Dept. of Education’s Unlawful Partial Relief Scheme Drop Lawsuit After Dept. Abandons Policy | Press Release

November 19, 2021

13,000 Borrowers Have Been Told They Are Entitled to Full Relief, But Many Are Still Waiting for That Relief to Come

 

BOSTON – Student borrowers in the class action lawsuit Pratt v. Cardona (previously Pratt v. DeVos) today moved to voluntarily dismiss the lawsuit, after the U.S. Department of Education agreed in March 2021 to end the previous administration’s unlawful partial relief policy for adjudicating borrower defense applications. The department further agreed to grant borrowers who were impacted by that policy the full debt relief they are owed.

Pratt v. Cardona challenged a Trump administration rule, issued in 2019, that adopted a deeply flawed methodology for deciding the amount of loan relief to afford students cheated by their schools. Under the rule, most borrowers whose claims were approved received only partial or no relief on their student loan debt. The plaintiffs in the lawsuit were represented by the Project on Predatory Student Lending and Public Citizen Litigation Group.

The Department of Education announced in March 2021 that the administration would stop using this flawed methodology. Eight months later, the department has confirmed that all borrowers who received decisions under that methodology have received notices awarding 100% relief. According to the department, the new decisions will result in an additional $140 million in debt cancellation for approximately13,000 borrowers, on top of approximately $40 million in debt discharged under the former partial relief methodology.

The lead plaintiff in the lawsuit, Sammia Pratt, attended a Corinthian-owned Everest school. The school induced her to borrow tens of thousands of dollars in federal student loans and promised her job placement and career services that never materialized. In the end, Pratt’s degree hindered, rather than helped, her career development. Despite her detailed borrower defense application laying out these facts, and Corinthian’s long and well-documented history of fraud, the Department of Education informed Pratt in February 2020 that it would grant only 10% relief. The department has since told Pratt that she will receive 100% relief.

Although the Department of Education has informed borrowers that they are entitled to full relief, many borrowers are still waiting for their loans to be fully cancelled.

“March 18th, 2021, I thought that my six-year student debt nightmare was finally over,” said Trisha Pipchinski, a borrower who received a 10% discharge after attending Corinthian College’s Everest Institute. “I paid $51,636.03 to attended Everest’s scam program and got no degree and credits that will not transfer. I filed for borrower defense hoping for relief. I waited over five years to only receive 10% discharge. Even since March, it’s been extremely stressful. Every time I call the Department of Education for information, I receive a different answer or no answers at all. I shouldn’t have to jump through hoops and constantly relive this nightmare of this debt, which is finally coming to end after months and years.”

Pipchinski joined several borrowers who shared similar frustrations during the Department of Education’s recent negotiated rulemaking session. This rulemaking will produce a new borrower defense rule applicable to future claims. The experience of the Pratt class members shows that it is critical that the department stay the course charted by this victory and award full loan cancellation to students with a borrower defense.

“That this deeply unlawful rule was quickly abandoned under Secretary Cardona is a testament to our clients’ strength in continuing to stand up for their rights and sound the alarm about these harmful, anti-borrower policies,” said Eileen Connor, director of the Project on Predatory Student Lending. “Our clients have lost years to an unlawful debt burden and broken borrower defense process that has caused irreparable harm. While they can never be truly made whole, the Department of Education can and must act with more urgency to end this nightmare for all who were cheated by their schools and grant them the 100% discharge they are owed. A promise isn’t enough – borrowers deserve action.”

“Students who were lied to by predatory schools should not be left saddled with federal student loan debt incurred as a result of that predatory behavior,” said Adina Rosenbaum, an attorney at Public Citizen Litigation Group. “The partial relief methodology bore no relationship to the harm the borrowers suffered, and we’re glad that it’s now a thing of the past. We urge the Department of Education to move quickly to ensure that all borrowers who are defrauded by predatory schools receive the relief they deserve.”

While the Department of Education’s notice that it will award full relief to borrowers who received decisions under the former partial relief methodology addresses the claims of approximately 13,000 borrowers in Pratt v. Cardona, other cases against the department remain. Over 200,000 class members in Calvillo Manriquez v Cardona and Sweet v Cardona have not received fair decisions from the department on their defenses and whether they will need to resume repaying their student loans. The Project on Predatory Student Lending represents borrowers in both cases.

 

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School represents former students of the predatory for-profit college industry. Its mission is to litigate to make it legally and financially impossible for the for-profit college industry to cheat students, and to relieve borrowers from fraudulent student loan debt. 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 Public Citizen Litigation Group

Public Citizen Litigation Group is the litigating arm of Public Citizen, a nonprofit consumer advocacy organization that champions the public interest in the halls of power. Public Citizen works to defend democracy, resist corporate power, and ensure that government works for the people. Public Citizen Litigation Group advocates for the rights of consumers in the courts and litigates to advance consumer, worker, and environmental protections.

 

###