Two Key Hearings Scheduled for Monday on Department of Education’s Illegal Attempts to Deny Relief to Former Corinthian Students | Press Release

April 26, 2018

Two Cases Involve Department’s Abuse of Former Corinthian Students and its Refusal to Discharge Their Debt

BOSTON – There are two major court hearings scheduled for Monday involving the Department of Education’s abuse of former Corinthian students and its insistence on continuing to collect on the debts of the defrauded students.

The two cases are Calvillo Manriquez v. DeVos and Dieffenbacher v. DeVos, each involving the Department’s illegal attempts to deny relief to Corinthian borrowers. These cases have implications for tens of thousands of former students and on the Department’s borrower defense rules and processes.

Both cases were brought by the Project on Predatory Student Lending at the Legal Services Center of Harvard Law School. The Project represents former students of predatory for-profit colleges. The Project’s mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students, in part by cancelling fraudulent student loan debt.

The hearings scheduled are as follows:

 

Calvillo Manriquez v. DeVos

Hearing on Motion for Preliminary Injunction

Hon. Sallie Kim

United States District Court for the Northern District of California, Courtroom A, 15th Floor

450 Golden Gate Avenue, San Francisco

9:30 a.m.

 

Dieffenbacher v. DeVos

Hearing on Motion for Summary Judgment

Hon. Virginia A. Phillips

United States District Court for the Central District of California, Courtroom 8A

350 West 1st Street, Los Angeles

2:00 p.m.

 

These hearings could mark a turning point in more than three years of efforts by former Corinthian students to assert their rights against the Department of Education. Although federal student loans must be cancelled when borrowers assert defenses to repayment based on certain school misconduct, the Department of Education has spent years denying this and trying to avoid giving Corinthian borrowers the loan cancellation they are due under the law. This has included its refusal to recognize Ms. Dieffenbacher’s borrower defense—raised in the context of wage garnishment—and its more recent “average earnings rule”—challenged in the Calvillo Manriquez case.

Under the Department’s watch, Corinthian took in billions in taxpayer money, used boiler-room style pressure tactics and racially-targeted advertising to build its business, all while producing outcomes for students so terrible that it had to cook its books in order stay in business. Corinthian filed bankruptcy and its debts disappeared. Meanwhile, the Department continues to collect—and assert that it may collect with impunity—on these fraudulent debts.

 

Cases background

Calvillo Manriquez v. DeVos

This is a class action lawsuit by Corinthian borrowers seeking to stop the Department of Education from denying the loan cancellation to which the borrowers are legally entitled. It is challenging the Department of Education’s unexplained, irrational, and abrupt change of course: after previously acknowledging that Corinthian’s widespread fraud entitled certain former students to the complete cancellation of their federal student loans, the Department is now using an illogical and opaque comparison of the average earnings of various groups of student loan borrowers to limit the percentage of these Corinthain borrowers’ loans that the Department will cancel.

On Monday, the court will hear arguments on the Corinthian borrowers’ request for a preliminary injunction.

The class is represented by the Project on Predatory Student Lending and Housing and Economic Rights Advocates.

Dieffenbacher v. DeVos

Sarah Dieffenbacher also is a former Corinthian student who applied to have her federal student loans from Corinthian cancelled four times. While her initial applications were being considered, the Department threatened to garnish her wages. When she objected to the wage garnishment, the Department denied her objection and ordered her wages to be garnished, despite all the evidence of Corinthian’s fraud that she submitted. Ms. Dieffenbacher brought this lawsuit in Los Angeles in February 2017 to challenge the Department’s determination that it could garnish her wages because her loans are enforceable.

On Monday, the court will hear arguments on Ms. Dieffenbacher’s motion for summary judgment and the Department’s motion to dismiss.

Ms. Dieffenbacher is represented by the Project on Predatory Student Lending and the Legal Aid Foundation of Los Angeles.

 

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, in part by relieving 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.

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