Update | The Department of Education Is Still Trying to Take Students’ Tax Returns

March 28, 2019

The rights of more than 100,000 borrowers are affected by this court ruling.

 

Update, March 28, 2019:

Even after a federal judge told it to stop, the Department of Education is still trying to get away with stealing students’ tax refunds.

Five months ago, the court told the Department that it must stop using this aggressive collection method against Everest Massachusetts borrowers. However, the Department stubbornly has only recognized the court’s order as applying to the two named plaintiffs, and continued to seize the tax refunds of other students who are covered by the pending borrower defense claim filed by the Massachusetts Attorney General on behalf of all Everest Massachusetts borrowers.

Because the Department refuses to follow the court’s order in this case, AG Healey recently filed a motion to force the Department to comply with the court order and stop using tax refund offset to collect on any Everest students in Massachusetts. Yesterday, we submitted our own filing in support of that motion. The government opposed.

——–

Originally published November 9, 2018: 

For years, the Department of Education has acted more like a collection agency than an agency operated for the benefit of students. Using aggressive collection methods, the Department of Education routinely seizes the tax refunds and wages of thousands of students who are struggling to pay their student loans after being cheated by predatory for-profit colleges.

On October 25, a federal judge told the Department of Education to stop.

In the case of Williams v. DeVos, the court found that the government had unlawfully taken the tax refunds of two Corinthian College students to collect on their student loans, even though the Department had previously acknowledged Corinthian’s fraud and the Massachusetts Attorney General had applied to have the students’ loans cancelled.

There are more than 100,000 students with pending borrower defense applications who could be affected by the decision.

Not only did the court withdraw the Department’s authority to seize these borrowers’ tax refunds, it ruled that the Department of Education must consider the borrower defense application submitted by the Massachusetts Attorney General on behalf of all Massachusetts Corinthian students – an important acknowledgement of the power of Attorneys General to submit borrower defense claims on behalf of their constituents.

This ruling is especially critical for the many thousands of Massachusetts students who have been cheated by Corinthian, because many of them are not aware that they are eligible for borrower defense, or don’t know how to apply. The Department has callously exploited that fact, mercilessly collecting and coercing payments from students while fully aware that debts from Corinthian are invalid.

This government theft of tax refunds, especially when those tax refunds are really anti-poverty benefits like the earned income tax credit, is unconscionable. The Department of Education shouldn’t need a court ruling to understand that.

The Department of Education has the power and the obligation to do the right thing and immediately cancel the debt of all Corinthian borrowers, all of whom were cheated on the government’s watch.

Any former student who was cheated by their school can apply to discharge their federal student loan debt. This website has information about borrower defense, and a link to the Department of Education’s Universal Borrower Defense form.