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Student loan borrowers who say they were defrauded sue Betsy DeVos for failing to cancel their debt

Via CNBC

By: Annie Nova

More than 150,000 former students of for-profit colleges filed a lawsuit against the U.S. Department of Education and Education Secretary Betsy DeVos on Tuesday, claiming the agency is depriving them of the student debt relief to which they’re legally entitled.

The plaintiffs, represented by Harvard Law School’s Project on Predatory Student Lending and Housing & Economic Rights Advocates, accuse the Department of Education under DeVos of failing to implement an Obama-era regulation known as “borrower defense, ” which allows students to have their federal student loans cancelled if their school misled them or engaged in other misconduct.

“The law is clear: Students who experienced fraud should not be required to pay back federal loans that should never have been made by the Department in the first place,” said Toby Merrill, director of Harvard Law School’s Project on Predatory Student Lending.

Around 160,000 people have filed claims with the government that their school defrauded them, and new applications continue to pour in. Almost all of these complaints concern for-profit schools, of which there are some 7,000 around the country and which take in around 15% of government financial aid.

However, student loan borrowers have found themselves waiting without answers. The Department of Education hasn’t approved or denied a borrower defense claim since June 2018.

An audit in 2017 by the Department of Education’s Office of Inspector General found that government staff working on borrower defense claims had been instructed not to submit any additional applications for approval.

A federal judge ruled last year that DeVos’ delays of the borrower defense regulation were unlawful. Still, advocates say the agency continues to neglect the applications.

Liz Hill, a spokeswoman for the Education Department, said the agency stands ready to process borrower defense claims.

“The only thing stopping the Department from finalizing thousands of these claims is the constant stream of litigation brought by ideological, so-called student advocate special interests,” Hill said.

Barmak Nassirian, director of federal relations at the American Association of State Colleges and Universities, says the Department of Education needs to proceed with these applications as quickly as possible.

“These folks need relief desperately,” Nassirian said. “Their lives are on hold.”

One of those people in limbo is Brandon Schultz, who decided to finally pursue his dream of becoming a graphic designer in 2008. He enrolled in the online division at the Art Institute, one of the for-profit schools that has produced a slew of borrower defense claims.

“I wanted to get into a field I enjoyed,” Schultz, 38, said. “The Art Institute of Pittsburgh, it sounded fancy. ”

He was disappointed to discover how basic the classes were. “It was just a bunch of beginner lessons on how to use these programs,” Schultz said. “I never did any graphic design work.”

He says communication with professors was sparse and his time with the school’s tutors was strictly limited. “I could only talk to a tutor for so long until they cut me off,” he said. “A lot of them couldn’t really speak English.”

Schultz went on interviews for graphic design positions, but said he was unprepared for common job tests such employers assign.

Today, he strings together a living through odd jobs, including painting and landscaping, and says there’s no way he can repay the nearly $90,000 he owes for his time at the Art Institute. He makes less than $20,000 a year.

He filed a borrower defense application in 2015. The Department of Education tells him his case is still undecided.

“It’s scary,” Schultz said. “All I can do it wait for the government to give me some type of judgment.”

2 Mass. Women Among Those Suing U.S Education Dept. To Force Action On Student Debt Relief

Via WBUR 

By: Kathleen McNerney

Education Secretary Betsy DeVos testifies before the House Education and Labor Committee at a hearing on ‘Examining the Policies and Priorities of the U.S. Department of Education’ on Capitol Hill in Washington. (AP Photo/Manuel Balce Ceneta, File)
Source: Flickr

class action lawsuit filed in California Tuesday claims the U.S. Department of Education is “intentionally” not processing debt relief claims by students who were defrauded by for-profit colleges.

“They don’t have any timetable to resolve these claims and it’s pretty clear that they don’t have any intention to,” said Eileen Connor, legal director for the Project on Predatory Student Lending at the Legal Services Center at Harvard Law School, which brought the suit with the California-based legal service organization Housing and Economic Rights Advocates.

The suit names seven plaintiffs, including two from Massachusetts, who filed for debt relief under the so-called “borrower defense” rule. It allows borrowers to request federal loan forgiveness if their school was found to be fraudulent. The suit claims the department has not processed a single claim since June 2018, leaving more than 160,000 borrowers in financial limbo.

A spokesman for the Department of Education initially refused comment Tuesday, but issued a statement from press secretary Liz Hill on Wednesday.

“The only thing stopping the Department from finalizing thousands of these claims is the constant stream of litigation brought by ideological, so-called student advocate special interests,” Hill’s statement said. It went on to say, “We have a responsibility to the taxpayer to ensure that claims are properly substantiated so that students receive the relief to which they are entitled.”

At a congressional hearing in May, the department’s principal deputy undersecretary, Diane Auer Jones, testified that the backlog was due to a 2018 federal court ruling that blocked the administration’s methodology for calculating how much debt should be forgiven for each student.

Connor said the delays are devastating for the students.

“Every day that goes by they’re being harmed even more. They can’t engage in normal financial transactions. Their credit is ruined,” she said. “They’re not able to pursue actual education that will give them job training … because of these bad student loan debts.”

The two Massachusetts women among the named plaintiffs are 35-year-old Jessica Jacobson of Lunenberg and 37-year-old Chenelle Archibald of Worcester.

According to the suit, Jacobson completed a media arts and animation program at the New England Institute of Art in Brookline in 2008. The school stopped enrolling students in 2015, and Jacobson filed a “borrower defense” claim to relieve approximately $25,000 in federal loans.

The Department of Education has not ruled on Jacobson’s case. The suit says her credit has been “destroyed” and her federal loans have grown to more than $35,000. (The U.S. Department of Justice reached a $95.5 million global settlement agreement with the school’s parent company, Education Management Corporation, in 2015 over consumer fraud and other allegations.)

Archibald graduated from Salter College, a two-year college in West Boylston, in 2010. She borrowed over $20,000 in federal loans, and has struggled to pay them back. The suit said she “cannot financially plan for her future because of the uncertainty of her debt” and that getting a car loan was a challenge. (The Massachusetts attorney general reached a $3.75 million agreement with Salter’s parent company, Premier Education Group, in 2014 over misrepresentations to enrolling students.)

“They aren’t asking for a handout. They aren’t asking for a policy change,” Connor said of the plaintiffs. “They’re asking for the current law to be followed with respect to their student loans.”

This post has been updated with a statement from the U.S. Department of Education, which was provided on Wednesday, after publication.

 

Press Release: For-Profit College Students File Lawsuit to Force Betsy DeVos to Follow the Law and Cancel Their Student Loan Debt

Via the Project on Predatory Student Lending

Over 158,000 students of abusive colleges applied for loan cancellation, yet the U.S. Department of Education has been refusing to process any of their claims for over a year, with some students waiting over four years for action

The Project on Predatory Student Lending is calling for students still waiting for debt relief to submit written testimony in the lawsuit

BOSTON, M.A. – [On June 25], 158,110 defrauded former for-profit college students filed a lawsuit against the U.S. Department of Education and Education Secretary Betsy DeVos seeking to force the agency to follow existing law and issue the debt relief to which the former students are entitled.

Under existing law, students and former students are eligible for federal loan cancellation if the college misled the students or violated state laws relating to the students’ education—as is the case for all the colleges these former students received loans to attend.

The former students are pressing Secretary DeVos and the Department to follow the law and immediately process their claims for debt relief. The Department has not processed a single claim in over a year and many of these students and former students have been waiting over four years for resolution. The Department’s inaction comes after it issued these predatory loans in the first place, using taxpayer dollars, and despite known fraudulent conduct by for-profit colleges.

The case, Sweet v. DeVos, was filed today in the United States District Court for the Northern District of California in the San Francisco Bay Area. The plaintiffs, represented by the Project on Predatory Student Lending at Harvard’s Legal Services Center along with Housing & Economic Rights Advocates (HERA), are suing on behalf of a class of more than 158,000 former students who have filed applications for borrower defense to repayment. As the complaint states, the Department of Education is intentionally ignoring students’ borrower defense claims, has taken no action to resolve them, and in many instances, forcibly collects loans in spite of the students’ claims that the loans are not valid.

“We’re suing Betsy DeVos and the Department of Education to hold them accountable and protect students across the country,” said Project on Predatory Student Lending Director Toby Merrill. “The law is clear: students who experienced fraud should not be required to pay back federal loans that should never have been made by the Department in the first place. Since Betsy DeVos continues to ignore these students’ legal rights, the only way they can have their voices heard is through the courts.”

Jessica Jacobson, one of the named plaintiffs, submitted her borrower defense claim in 2015 after being scammed by the for-profit college, New England Institute of Art. She is still waiting for her $30,000 in federal loans to be cancelled.

“This has put my whole life on hold. I can’t sign for home, a car, anything because I don’t know what’s going to happen to this debt. It’s extremely stressful and impacts my whole family,” Jacobson said. “It’s beyond disappointing. The Department of Education did nothing to stop these schools from doing this in the first place and now they are ignoring those of us who were cheated on their watch.”

“The Department of Education has knowingly enabled for-profit colleges to defraud students,” said Eileen Connor, Legal Director at the Project on Predatory Student Lending. “It recklessly continued to act as a loan broker for disreputable schools despite clear records of abuse and misconduct, and now the Department refuses to acknowledge the damage it has done by issuing these predatory loans to students, at taxpayers’ expense. With this lawsuit, we will hold Betsy DeVos accountable and deliver justice for those students awaiting debt relief.”

“The Department has a duty to act on behalf of the countless Americans, including dozens of HERA clients, who have been defrauded by predatory for-profit schools,” said Natalie Lyons, Senior Attorney for Housing & Economic Rights Advocates. “Rather, the Department is abdicating its duty while thousands of individuals struggle under the weight of burdensome student loan debt and without the benefit of a credible education to advance their lives and the lives of their families. We’re taking this action, because of the Department and Secretary DeVos’ failure to do so.”

In addition to filing suit, the Project on Predatory Student Lending is calling on students—specifically those who were cheated by for-profit colleges and are awaiting the Department’s decision on their borrower defense claims—to support the litigation and share with the court the countless ways they have been hurt by the for-profit college industry and the Department. Students can supply written testimony in this lawsuit by filling out a simple online form here.

Click here to view quotations from students across the country who were defrauded by for-profit colleges, as well as statements of support for today’s litigation from organizations and elected officials.

Currently, 45 million Americans have nearly $1.6 trillion combined in student loan debt, depressing the economic progression of families and the broader economy. Today’s lawsuit addresses the most pernicious type of student loan debt—the kind made to students at abusive for-profit colleges. The Department of Education issued these loans despite glaring indicators that the schools would do nothing but rip off students. Ultimately, the students are paying the price for a worthless degree that has failed to improve their lives, and in many cases, has caused severe personal and economic setbacks. For-profit colleges account for 13 percent of the student population, but 47 percent of federal loan defaults. And 98 percent of all loan cancellation applications sent to the federal government in 2016 and 2017 were due to fraudulent for-profit colleges.

Background on the Case:

Over the past several decades, hundreds of thousands of students borrowed federal student loans to attend various for-profit colleges, including ITT Technical Institute, Corinthian Colleges, the Art Institutes, the New England Institute of Art, Salter College, Brooks Institute of Photography, and more. The schools falsely and deceptively promised students high-paying jobs, state-of-the-art vocational training, and long and fulfilling careers.

Since 2015, over 200,000 of these former students have asserted their right according to existing federal law to a complete discharge of their federal student loans due to their schools’ misconduct. As it was legally obligated to do, the Department of Education started to adjudicate these borrower defenses, approving nearly 28,000 borrower defenses in the six-month period before January 20, 2017.

Since then, under Secretary DeVos’ tenure, the Department of Education halted all processing of borrower defense claims. It has refused to adjudicate any borrower defense from any student since May 2018, and has ordered the office of Federal Student Aid (“FSA”) to stop processing any borrower defense application.

The Department of Education’s affirmative decision to keep these students in limbo—some for over four years—has further destroyed students’ credit and limited their access to federal student aid. For students who have defaulted on their loans, the Department of Education has invoked extraordinary extrajudicial powers to garnish their wages or seize their tax credits (for many, their Earned Income Tax Credit).

Named Plaintiffs bring this lawsuit under the Administrative Procedure Act on behalf of themselves and all other former students whose claims for loan cancellation have stalled.

Today’s lawsuit builds on past legal efforts to hold this administration accountable and protect students through court action. In the case of Williams v DeVos, students fought back against having their tax refunds stolen by the Department of Education, and won. In the case of Calvillo Manriquez v DeVos, students stopped the Department from using its illegal partial denial rule. And in Bauer v DeVos, a judge told the Department  of Education that it must implement the 2016 Borrower Defense rule.

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 and taxpayers.

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.

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My Student Loan Truth: Theresa’s Brooks Institute Story

Via the Project on Predatory Student Lending  

By: Theresa Sweet

Source: Flickr

When Theresa graduated from the Brooks Institute in 2006, she never imagined that she would find herself suing the U.S. Department of Education years later over her student loan debt. But after being cheated by her school and years of waiting for answers, she is a plaintiff in Sweet v DeVos – representing over 158,000 students who were cheated by their schools and have been ignored by Betsy DeVos and the U.S. Department of Education. This is her story.

My name is Theresa Sweet.

On the day I graduated from college, my fellow students and I were lined up in a cordoned off area, under the perfect Santa Barbara sun, waiting to enter the theater and accept our diplomas. Myself and several other students turned our heads toward a commotion beyond the ropes only to see an exasperated administrator tailing my father, sternly telling him that he needed to wait until after the ceremony to speak with his student. My mounting concern quickly turned to laughter when he hurried over, gave me a quick hug, and said, “I just wanted to tell you again how proud I am of you.” That moment remains among a literal handful of times in my life that I ever saw my father cry.

While The Brooks Institute (then owned by Career Education Corporation) is no longer in operation, I know that there are plenty of predatory, for profit trade schools still operating in California today. I am here today to share my story in the hope that I can prevent others from living through a similar experience.

I attended the Brooks Institute of Photography in Santa Barbara and Ventura, CA from January 2003 to June 2006, graduating with a Bachelor of Arts in Professional Photography. Once a source of pride, my education quickly became a ruinous source of personal and financial stress.

Since graduation, I have never had a job where I used the education I received at Brooks. I have never had a job that has helped me earn an income that is remotely close to what is necessary to pay off these loans. I can’t finance a car, much less a home. It is unlikely that I will ever be able to marry or adopt children as I would essentially be condemning my family to a lifetime of poverty.

I currently work as a Certified Nursing Assistant, and I would love to be able to further my education and obtain a Nursing degree. Unfortunately, Brooks, like so many other for-profits, actively misled students as to the transferability of the course credits they earned. In addition, Brooks also made sure to guide students to borrow the maximum amount of Federal Student Loans allowed in pursuit of a Bachelor’s Degree, making me ineligible for student loans and financial aid to pursue nursing.

Brooks used unethical, high pressure sales tactics such as pain points about me being the first person in my immediate family to attend and graduate from college. They relied on the fact that there was no one in my life who could help me ask the right questions. They made a point of never answering questions via email, only over the phone. They created the false impression that the admissions process was competitive when, in fact, all they cared about what getting the maximum number of students enrolled and filling out student loans applications. In reality, Brooks admitted anyone with a high school diploma or a GED, as long as that person could get a student loan.

Although I had no way of knowing it at the time, after I graduated I found out that the “Admissions Counselors” were just commissioned sales people. They weren’t paid to give me accurate information about the school, to tell me how much it could cost me, or to counsel me on whether the school would help me reach my goals. They were only paid to get me to enroll.

After graduation, the “Career Services” office regularly contacted me with financially meaningless opportunities for unpaid jobs that they found on the local Craigslist page.

Perhaps worst of all, Admissions Counselors blatantly lied about the employment rates of students after graduation as well as the amount of money these graduates were making, knowing that the lies they were telling were giving students false impression that they would be able to pay back their student loans. You wouldn’t have to look very hard to find evidence of all of this.

In short, while I worked multiple jobs to stay at school, Brooks and CEC were happily raking profits by defrauding thousands of students. And NO ONE was stopping them. No one was alerting the public or prospective students. No one was there to help any of us recoup our financial losses, to say nothing of the disastrous effect this high level of debt has on personal relationships.

If this seems outrageous to you, GOOD! It is outrageous, and it isn’t hyperbole. There are hundreds of former Brooks Students who have already filed Borrowers Defense to Repayment claims, and that number is sure to grow. I filed my own paperwork in 2016. I’ve been waiting for a response for three years. It is one of 158,110 applications that sits at the Department of Education unanswered right now.

The Department of Education is determined to sit on their hands, doing nothing to help. So us students have been forced to turn to the courts for justice. We are done waiting.

Learn more about the lawsuit Sweet v. DeVos

Collecting on Dreams

Via Harvard Law Today

By: Julia Hanna

Toby Merrill ’11 Credit: Leah Fasten

As a 2L, Toby Merrill ’11 was enrolled in a Harvard Law School consumer clinic litigating against predatory lenders of subprime mortgages. There she fought for the rights of individuals who had hoped to fulfill the American dream of home ownership. Now Merrill has a new mission, no less urgent: to bring a measure of fairness to people affected by the predatory lending practices of some for-profit colleges that are alleged to provide worthless degrees in exchange for thousands of dollars in government-backed loans. Frequently members of some of society’s most vulnerable populations, these clients often began their journey with the simple desire for upward mobility—namely, a better life through education.

In 2012, Merrill founded and became director of the HLS Project on Predatory Student Lending, focusing on for-profit schools that promised students a direct path to well-paying, middle-class jobs via programs focused on a specific role—medical assistant or paralegal, for example—but failed to deliver. Senate hearings and a two-year investigation into these schools led by then-Iowa Sen. Tom Harkin detailed the systematic use of inflated job placement data and aggressive recruitment tactics to target groups that included immigrants, people of color, veterans, and single mothers. In one case, noted by Harkin, a school claimed that it placed 70% to 90% of students in jobs, when the actual rate was 20% to 30%.

The financial fallout of that widespread fraud, when combined with the poor quality of instruction found in many programs, was catastrophic: Statistics show that individuals enrolled in for-profit colleges typically account for 13% of the student population but 47% of all federal loan defaults, often because of the inability of the borrowers to secure well-paying jobs; and more than $30 billion in federal tax funding goes to for-profit institutions every year, in the form of those student loans.

Eileen Connor, director of litigation at the project
Credit: Leah Fasten

In her work with victims of predatory subprime mortgage lending, Merrill had been a firsthand witness to the power of affirmative litigation on behalf of individuals harmed by unscrupulous lending practices. She saw how that work could not only help individuals get restitution but also, in the best-case scenario, lead to improved policy. When she learned more about the tactics used to lure students into shoddy degree programs with little value on the job market—students who were trying to improve their lives by getting an education and who, at that point, had virtually no options for legal action—the issue had a visceral pull.

“Predatory student lending sits right at the intersection of racial and economic justice,” says Merrill, whose interest in fighting injustice and race discrimination in America led her to spend the summer after her second year in law school working on the NAACP’s voting rights project and in its death penalty practice.

Located in HLS’s Wilmer­Hale Legal Services Center in Jamaica Plain, the project and its staff of 12 are engaged in class-action lawsuits on behalf of tens of thousands of students at now-defunct institutions such as Corinthian Colleges (with a class of 110,000 plaintiffs) and ITT Technical Institute (750,000). But they also take on individual cases which they feel will effect change in industry or government practices. Director of Litigation Eileen Connor has met hundreds of people whose lives have been upended by predatory student lending, but she still finds herself thinking about Crystal, a young single mother who was recruited away from Roxbury Community College by a Corinthian school subsidiary.

Attorney Josh Rovenger (at desk) joined the project last year, inspired by the passion of Toby Merrill and her team.
Credit: Leah Fasten

“They told her, ‘You can do what you’re doing here, but twice as fast—so you’ll be able to work that much sooner and support your young child.’ Of course, that was appealing to her,” Connor says. The report issued by the Harkin Senate committee found that recruiters at some for-profit colleges are frequently instructed to exploit just such a “pain point” in order to convince a prospective student to enroll. But the quality of education Crystal received didn’t provide her with the skills she needed to compete in the job market. The Senate report also found that, on average, only 25% of the money paid to for-profit colleges is rolled into needed teaching materials, equipment, and instructor pay; the remaining 75% is used for marketing, executive compensation, and profit. Unable to find employment in her chosen field of medical assistant, Crystal was forced to default on her loan and ended up living in a homeless shelter; the default had disqualified her from applying for subsidized housing. In addition, the government garnished her wages and took her earned income tax credit, which she had been planning to use as the first and last months’ deposit to rent an apartment. There is no time limit on the collection of student loan debt, so these penalties can continue for decades.

“This all happened because a predatory company took advantage of someone with the earnest desire to learn and to work,” Connor says. “It’s a perversion of the ideal of higher education when the reason we have a federal student loan program at all is to create opportunity.”

Josh Rovenger ’13 joined the project last year. While he had always been drawn to public interest law, he hadn’t been following the legal cases involving for-profit colleges before interviewing for an attorney position with Merrill and Connor. Then he got excited: “It wasn’t really an exact moment or case, but more the passion they showed. Toby said that once you learn about the work, you can’t help but get angry and worked-up about what’s going on.”

Every semester the HLS Project on Predatory Lending trains six to eight students, including this spring, Levi Barry ’19 and Sejal Singh ’20.
Credit: Leah Fasten

And if he ever feels distanced from that moment, a clinical student’s reaction brings it all back: “It’s a reminder to everyone here of how absurd some of the actions are that we’re challenging,” Rovenger says. Each semester, the project hosts six to eight clinical students, providing exposure to the class-action cases underway while also enabling students to act on behalf of individuals. “My clients are people who have been taken advantage of,” says Sejal Singh ’20. “But they are not victims—they’re very smart, resilient actors who are committed to moving forward with their lives. Working with them has been inspiring, and in the process, I really feel as though I’ve been able to build a range of skills that are going to prepare me to move forward in my career as an attorney.”

Creating positive change in an area as complex and far-reaching as predatory student lending can have a frustratingly long timeline. But in its relatively brief seven-year existence, the project has earned substantial wins, bringing clients that much closer to justice. Among its recent victories was a ruling last fall in the case Bauer v. DeVos that—in conjunction with a similar suit brought by 19 states and the District of Columbia—prevented the Department of Education from illegally delaying the enforcement of established borrower defense regulations that offer protections for students. Such protections include the cancellation of debt when an institution breaks the law and a ban on forced arbitration.

“Forced arbitration has been a longstanding issue in the context of consumer protection,” says Merrill. “The transparency that occurs with private litigation has been shown by study after study to be an important driver of public enforcement; forced arbitration cuts off an entire stream of information that’s key to functional oversight. Now, for the first time in a long, long time, we have the opportunity to bring people’s claims in court.”

Students in the project, including Zoe Kemmerling ’20, provide direct services to clients. They also get exposure to complex litigation.
Credit: Leah Fasten

Included in the project’s active impact litigation docket is the class-action lawsuit Calvillo Manriquez v. DeVos, a case brought jointly with Megumi Tsutsui ’14, a former student of the project now practicing law at the Oakland, California-based Housing and Economic Rights Advocates. The suit charges that the U.S. Department of Education required tens of thousands of former Corinthian Colleges students to repay their loans, despite earlier findings by the Obama administration Department of Education that they were not liable to do so. Rather than discharge the loans, the department reversed course, calculating a repayment rate based on private income data obtained from the Social Security Administration.

“The thrust of the case is that the Department of Education is engaged in retroactive rulemaking using illegally obtained information,” says Rovenger. For now, the team has won a preliminary injunction to freeze loan collection for thousands of students, with the eventual goal being to fully discharge them.

“Our work here has always involved fighting against a Department of Education that isn’t doing what it should be,” says Merrill. “So while we have sued the department of the current administration a number of times, we also sued the one under the previous administration.”

Credit: Leah Fasten

Merrill cites relatively recent successes, including the ruling reversing the freeze on the mandatory arbitration ban, as evidence that the legal landscape is shifting and coalescing around a new perspective on student lending. “Three years ago, [students] couldn’t sue a for-profit school. It was hard to get the government … to decide to do anything,” she says. “We were able to change both of those things.” Even so, she acknowledges that hundreds of thousands of students represented in federal courts around the country are still waiting for relief. It’s part of what keeps her and the rest of the team motivated. And they’re not alone. Merrill notes that the Project on Predatory Student Lending works with a range of advocacy organizations across the country, supplying needed information and insight to help advance policy change. And the network of clinic alumni, Megumi Tsutsui and others, has only extended its reach. “It’s been so gratifying to see former students take up the fight as part of their professional endeavors,” says Merrill. “We’re all focusing our energy on cases that we think can make a difference, moving the ball forward to make a more fair and just society.”

Project on Predatory Student Lending Director Toby Merrill Honored by the American Constitution Society

Via the Project on Predatory Student Lending

Toby Merrill Credit: Martha Stewart

At the American Constitution Society’s National Convention in Washington, D.C. this week, Project on Predatory Student Lending director and founder Toby Merrill was honored as a finalist for the prestigious David Carliner Public Interest Award. The American Constitution Society(ACS) is the nation’s leading progressive legal organization.

David Carliner, whom the award honors, was a champion of justice throughout his career, devoted to protecting civil and human rights and combating injustice on a systemic basis. The award recognizes outstanding public interest lawyers whose work best exemplifies Carliner’s legacy.

Toby has been a fierce advocate for students cheated by for-profit colleges since she founded the Project on Predatory Student Lending in 2012, and has since led the Project’s team of attorneys in winning groundbreaking court victories in landmark cases protecting and advancing the rights of defrauded students. The Project is part of Harvard Law School’s clinical program, and a number of its clinical students have gone on to pursue careers to attacking the big, systemic issues that have allowed such a predatory industry to thrive for so long.

“David Carliner was a true civil rights champion, and I’m honored to to be associated with this award named for him,” Toby said. “The Project’s clients have been treated so unfairly—first by a predatory industry and then by a government that refuses to recognize their rights. This recognition is a testament to their willingness to stand up and fight for their own rights and the rights of the millions of students across this country who were seeking a better life through higher education, and instead were lied to and ripped off by for-profit colleges. The billions of dollars of debt that the government tries to collect from them every day is illegitimate.

“In addition to our clients’ bravery and perseverance, the Project’s work is driven by its dedicated staff and clinical students,” Toby added. “They inspire me every day, and I’m lucky to stand up for our clients with such an amazing team.”

The Project represents thousands of former for-profit college students across the country. The Project has cases against for-profit college companies, and against the Department of Education for enabling and supporting this predatory industry. Many of the Project’s clients are people of color, veterans, and immigrants. Most are the first in their family to attend college. The Project’s work supports its broader goals of economic justice and racial equality.

The Project is part of the Legal Services Center of Harvard Law School (LSC), a community law office and clinical teaching site of the law school. Clinical students join the Project’s staff to litigate cases on behalf of clients, in partnership with community-based and advocacy organizations.

 

In the Fight for Student Loan Relief

By: Drew Henderson, J.D. ’19

Drew Henderson, J.D. ’19

For years, Corinthian Colleges, a network of over one hundred for-profit schools, defrauded students to rake in profits from taxpayer-funded federal student aid. Tens of thousands of students—many the first in their families to seek out higher education—were promised serious career training and job prospects, but left Corinthian’s campuses with little more than thousands of dollars in debt. The company’s bankruptcy in 2015 followed a series of investigations into the fraud that the school inflicted nationwide. But for many who were victimized by Corinthian’s practices, relief has yet to arrive. Over 100,000 applications for loan discharge remain pending at the Department of Education, with tens of thousands coming from Corinthian students.

The Project on Predatory Student Lending at Harvard’s Legal Services Center has long represented students who attended Corinthian schools. When I first joined the Predatory Lending and Consumer Protection Clinic, in the spring semester of 2018, the Project was involved in at least three lawsuits against the Department of Education for its failure to provide legally mandated relief on the federal loans of former Corinthian students. One of those lawsuits, Calvillo Manriquez v. DeVos, was a class action involving Corinthian borrowers whose applications for relief remain pending. Under a summary process established in the previous administration, those borrowers are entitled to prompt and full discharge of their debts.

A few weeks after the clinic started, I began working on Calvillo Manriquez. Corinthian students were beginning to hear back on their claims—but they were receiving much less than the full relief they had been promised. This news was concerning: not only would these partial denials require that our clients be forced to pay back unjust loans  that they could not afford, but the adjudication of their claims also meant that they would face collection soon, before we could challenge the Department’s actions in court.

Project directors and attorneys, Eileen Connor, Toby Merrill, and Josh Rovenger, decided to amend our complaint to challenge the Department’s new methodology for partially denying students’ discharge applications. And to prevent the Department from collecting on our clients in the meantime, we would also file for a preliminary injunction. The expedited schedule of a motion for preliminary injunction meant that I would get to file our motion and attend oral argument in the Northern District of California before the end of my semester in the clinic.

To amend our complaint, we would need additional named plaintiffs who themselves had received partial denial of their claims. These individuals would need to be able to convey to the court why the Department’s illegal policy shift threatened to cause them irreparable harm, such that it should be enjoined. Ordinarily, such preliminary relief is not available when money is at stake, but an exception exists for extreme financial hardship.

We had received word from legal aid colleagues in Los Angeles that one of their clients might be willing to serve as a named plaintiff in our lawsuit. When I spoke with the client last March, she explained how she had attended a Corinthian program after school recruiters promised that her degree would qualify her for a job in medical billing. She graduated on-time from the program, only a few months before Corinthian shut down. She never even received her diploma. Since that time, she has found that deficiencies in the school’s curriculum meant that she cannot obtain a job like she was promised. Only a week before our call, the Department had told her that she would receive only twenty percent discharge of her loans. Alongside the expenses of caring for three children, this partial denial would be a tremendous burden for her family. Her story was one of hope for a brighter future that  sadly turned to disappointment, and it is one that I heard many times during my clinical semester.

I worked to capture the client’s story in a declaration attached to our motion for preliminary injunction. In April, when I attended the oral argument in San Francisco, it was reassuring to hear the court reject the argument that our client had not faced irreparable harm — her story had  been heard. It was similarly gratifying a few weeks later, when the court ruled in our clients’ favor, enjoining the Department from implementing its partial-denial policy. But the reality is that for these students, staving off collection is not enough: long after Corinthian closed, their debts remain.

The fight continues.

Mayor Pete Answers My Question About Predatory For-Profit Colleges

Via the Project on Predatory Student Lending 

Last Saturday, Linsdey Withem from the Project on Predatory Student Lending attended a town hall in New Hampshire to ask presidential hopeful Pete Burrigeg a question. She writes:

I went to a town hall in New Hampshire hoping for the opportunity to ask Pete Buttigieg one question: Would he encourage his education department to cancel federal student debt from predatory for-profit colleges?

I wanted to ask him this question because, in addition to being a 2020 presidential candidate, Pete Buttigieg is the mayor of South Bend, Indiana. South Bend is only a couple hours from Indianapolis where ITT Technical Institute, one of the largest and most predatory chains of for-profit colleges, was headquartered before they shut down. I know how important my question is because for the past decade I have observed, first hand, how ITT Technical Institute, and other for-profit colleges, shamelessly defrauded students. I was anxious to hear what Mayor Pete plans to do about it.

Ten years ago, I took an entry level position at an organization called The Accrediting Council for Independent Colleges and Schools, also known as ACICS. There, I learned that accreditation is the gateway that allows colleges to participate in federal financial aid programs. There are several kinds of accreditation, and ACICS focuses on the accreditation of for-profit colleges.

In 2010, ACICS was booming. Applications for new schools and new programs poured in from all over the country. Most of these applications were from a handful of large companies that owned chains of schools, including ITT Technical Institute. In my role at ACICS, I coordinated evaluations of these schools.

As I traveled around the country to evaluate ACICS schools, I noticed a trend. Large chains of schools used elaborate advertising techniques to target low-income and minority populations, promise lucrative job prospects, and then charged outrageous tuition for subpar training programs. There was no way the training offered at these schools would give students the earning potential to pay back their student loan debt. Students, fooled by these schools’ lies, were taking out mountains of debt and getting little to nothing in return.

These schools claimed to be invested in helping nontraditional students get an education and better their lives. But when you looked behind the curtain, these companies used predatory practices to target vulnerable populations so that they could profit off federal financial aid, which ACICS accreditation allowed them to access.

As time went on, I realized more unsettling things about ACICS. The Accrediting Council that made decisions about what schools ACICS would accept was largely made of executives from the very same companies engaging in the predatory practices that cheated students for their financial aid money. The fox wasn’t just guarding the hen house–the fox owned the hen house.

After seeing the fraudulent behavior and predatory practices of the for-profit college industry, I made the easy decision to take my career in a different direction and left ACICS. Years later, I was offered a position working for the Project on Predatory Student Lending, an organization standing up for the rights of students who were cheated by the for-profit college industry.

Last Saturday, I was proud to tell Mayor Pete I work with a group that defends former students of predatory for-profit colleges. Our government owes it to students who were sold lies and cheated out of their financial aid to cancel their student loan debt. As Mayor Pete put it, “If we’re going to talk about student loan forgiveness, the very first thing we should look at is the cases of these people who were let down.” I hope that all 2020 candidates see the importance of canceling all student loan debt for students who were let down.

 

Clinical Instructor Eileen Conner Quoted in the New York Times

In a New York Times article, “Education Department Has Stalled on Debt Relief for Defrauded Students” Clinical Instructor and Litigation Director of the Project on Predatory Student Lending Eileen Conner was quoted in the following passage:

Eileen Connor, the director of litigation at Harvard Law School’s Project on Predatory Student Lending, said that she had borrowers who had claims pending from as far back as four years.

The project, which represents thousands of students from ITT Tech and Corinthian, said that it had over 14,000 applications from ITT Tech pending at the department. Only 33 have been approved, and those were by the Obama administration. Zero have been approved under Ms. DeVos.

Debt on the loans has continued to grow, Ms. Connor said. In lawsuits, the group has described how borrowers have experienced anxiety, fear and psychological and financial distress caused by delays.

The project has won several lawsuits against Ms. DeVos. But it said that the department continued to ignore crucial court rulings, including one that found the department could not take tax refunds of former Corinthian College students to pay their student loans while they have borrower defense applications pending.

“The department’s delay is not neutral,” Ms. Connor said. “It’s harming students.”

My Student Loan Truth: Kristina’s Virginia College Story

Via the Project on Predatory Student Lending

This is Kristina’s student loan truth.Virginia College Student

“I was focused. I had goals.”

When Kristina Jefferson enrolled in the cosmetology program at Virginia College last year, she thought she would have been proudly walking across the stage at her graduation with her cosmetology certificate this month, and prepared to take her cosmetology licensure examination, but the school failed her. Virginia College’s abrupt shutdown last year was just one of many instances where the school failed her and the rest of its students.

Thousands of students like Kristina have been left with no school, no education, and tens of thousands of dollars in debt by Virginia College and other schools owned by its parent company, Education Corporation of America.

If you were a student at Virginia College, Brightwood College, Brightwood Career Institute, Ecotech Institute, Golf Academy of America, or New England College of Business, click on this link to find out more information about the status of the schools and how you may be able to file a claim for a refund if the school has any assets left.

 

How did you hear about Virginia College?

Virginia College had a lot of commercials with people explaining their life struggles and how the school helped them. There was one commercial with a Black woman riding the bus that stuck out to me. She was homeless, and she had two children. She decided to go to school for Medical Assisting, and it bettered her life. After attending Virginia College, she got a job, her life improved, and she had more stability. She didn’t have to ride the bus anymore. I understood her struggle because I relied heavily on the bus for transportation, and I, too, wanted to better my life.

That was in 2014; I decided to go to Virginia College for Medical Assisting because I wanted to care for people. I know how it feels to be sick. I am a good listener. I wanted to help lift people’s spirits.

They never helped me get a job in the medical field. But I had taught myself how to do hair and had been doing it for years, so in 2018 I decided I wanted to hone my skills and get licensed. I had seen a lot of online advertisements on Facebook and I took it as a sign that I should do the cosmetology program, so I enrolled last year.

 

What did they tell you about the programs and getting a job when you started?

Both times they said we were guaranteed to get a job after we finished the program. It was not true, and all they did was send links of jobs from Indeed. I was living with my mother and was not financially independent. I had to take the bus which required me to wake up at 4am to get to school on time; I even had to walk on the highway. The school promised me that they would help me get a job and help me get an easier commute, but they did nothing.

 

Describe the educational experience at Virginia College.

We had to teach ourselves. The instructors didn’t want to help us understand or answer questions. For the cosmetology program, they only taught by showing us videos. The instructors also didn’t teach us certain skills they said they would. We were supposed to learn how to do makeup, but instead, the instructor gave us a paper printout with a face and we used colored pencils, our own makeup, or the school’s outdated makeup to color in the face.

They promised we would get jobs, help with our resumes, they would teach us, and that our credits were transferable. They didn’t keep any of those promises. They didn’t even keep the school open!

 

How did you get your student loans?

When enrolling I met with the financial aid people, but they didn’t explain anything to me. I didn’t know the amount of loans the school was borrowing on my account. They told me everything would be covered by student loans, but toward the end of my time at Virginia College, I was told I had a balance and wouldn’t be able to receive my certificate if I didn’t pay the balance. That’s on top of the more than $30,000 in federal loans I have because of them.

 

What impact has Virginia College and this debt had on your life?

They really ruined my life, and it’s not right. I had goals. The school closing just made it harder for me. I have to start all over now. I was told that my credits were transferable, but it’s not true. Basically, my transcript is worthless. It’s just a bunch of words. It’s not right.

 

Some policy-makers doubt that for-profit colleges are a problem – what would you say to them?

It is a problem when they are just trying to make money and don’t care about the students. Virginia College closed down and people are suffering. It is not right. They took our money and then closed and left the students to try to fix what they caused.

 

The Department of Education has refused to cancel the loans of thousands of former students of for-profit colleges. What would you say to the Department about the need to cancel these loans?

They need to be more understanding of situations like this and protect the students. It’s not right.

 

Sound familiar? Do you have a similar story to Kristina’s at Virginia College, Brightwood College, Brightwood Career Institute, Ecotech Institute, Golf Academy of America, or New England College of Business? Click on this link to find out more information about the status of the schools and how you may be able to file a claim for a refund if the school has any assets left.

Project on Predatory Lending Quoted in Several Articles

The Project on Predatory Lending attorneys have been quoted in recent articles regarding the Department of Education’s decisions to cut federal financial to Argosy University, a for-profit college, and rescind its policies on student loan funds forgiveness.

“The industry was on its heels, but they’ve been given new life by the department under DeVos,” said Eileen Connor, the director of litigation at Harvard Law School’s Project on Predatory Student Lending. –“A College Chain Crumbles, and Millions in Student Loan Cash Disappears”, New York Times

 

Toby Merrill, who directs the Harvard Law School’s Project on Predatory Student Lending, said that DeVos is making basic legal mistakes.  “It speaks to the Department of Education’s unwillingness or inability to follow the basic law around how federal agencies conduct themselves,” Merrill told Politico. Adding, “At the very least, they cross their Ts and dot their Is and therefore are less vulnerable to some of the procedural challenges that have been the undoing of so many of this Department of Education’s policies. – “Besty Devos’ war on Obama’s legacy is losing badly because of her ‘inability to follow basic laws'”, Raw Story

 

Federal student loans are supposed to be forgiven if the feds determine a school defrauded its students, consumer attorneys say, but as we reported last year, that still hasn’t happened for some Corinthian students. The Project on Predatory Student Lending, a legal clinic at Harvard University, is suing the federal government on behalf of thousands of former Corinthian College students. – “Argosy University closing leaves students scrambling”, Consumer Affairs

Despite Court Order in it’s Favor, the Project on Predatory Student Lending Continues to Wait for DOJ to Produce Documents

Via the Project on Predatory Student Lending

Source: Pexels

Nearly three years after submitting its original Freedom of Information Act (“FOIA”) request, the Project on Predatory Student Lending is still waiting for the Department of Justice (“DOJ”) to fulfill its legal obligations to produce documents that Education Management Corporation produced to it in a federal whistleblower lawsuit.

On July 9, 2018, the Court ordered DOJ to produce approximately 3,600 pages of documents to the Project—documents that the government had asserted that the public had no right to. Over seven months later, DOJ still has not fully complied with the Court’s order. DOJ initially produced approximately 1,800 pages to our office, refusing to produce the remaining pages. As requested by the Project, the Court again instructed DOJ to produce the remaining 1,800 pages. DOJ then produced the outstanding pages, but many of them were either heavily or completely redacted. After the Project questioned the appropriateness of the redactions, the government determined that it would remove some of the redactions and would reproduce the documents to the Project. Though DOJ has reproduced some of the documents in question, the Project is still waiting for all documents that it is lawfully entitled to.

Related Litigation
DOJ provided conflicting reasons for why it originally withheld documents from the Project. Initially, it cited four FOIA exemptions and protective orders in the whistleblower litigation as the basis for denying the Project’s FOIA request. Later, the government asserted that the requested documents were not agency records and indicated that it had not even searched for or reviewed potentially responsive documents. Consequently, in March 2018, the Project filed a separate FOIA request to DOJ for all records related to its original FOIA request and the administrative appeal of that original request. On December 7, 2018, the Project filed a second FOIA lawsuit against DOJ challenging its failure to respond to this second FOIA request. Despite its complete failure to respond to the Project’s second FOIA request and consistent with its previous recalcitrance to comply with legitimate FOIA requests, DOJ filed its answer in which it denies that the Project is entitled to any documents.

Related Documents
The Court’s Order of July 9, 2018
The Project’s Second FOIA Complaint

Higher Education is Failing Students of Color, but Congress Can Help

Via the Project on Predatory Student Lending

Source: Pexels

The harsh reality is that the burdens of student debt are not shared equally. Students of color borrow more on average than other students seeking the same degree, and are two to three times more likely to default than their white counterparts. Furthermore, because they borrow more, students of color are disproportionately impacted by the negative effects of poor student loan servicing, which contribute to the racial wealth gap.

Beyond the financial barriers to equity in higher education, more generally, students of color are less likely to graduate with degrees than their white peers and are more likely to be pushed out of their schools due to safety concerns. These systemic problems require policymakers to come to the table to drive real change.

Fortunately, select leaders in Congress are acknowledging the issue and are researching ways to address it. Earlier this year, Senators Doug Jones, Elizabeth Warren, Kamala Harris, and Catherine Cortez Masto asked the Project on Predatory Student Lending and other experts to recommend legislative changes to address racial disparities in student debt, as well as the various challenges students of color face in college and career training programs. In partnership with the Lawyers’ Committee for Civil Rights Under Law, Mississippi Center for Justice, North Carolina Justice Center, and Southern Poverty Law Center, we recommended five areas where focused reforms could decrease racial inequality in higher education: (1) more oversight and accountability of for-profit colleges; (2) more data collection and transparency; (3) better oversight and management of loan servicers; (4) eliminate several specific barriers to student access and success; and (5) better protect student safety. Here is a brief summary of our recommendations.

1. Oversight and Accountability of For-Profit Colleges

For-profit colleges play an outsized role in generating and perpetuating disparate outcomes for students of color. People of color are significantly overrepresented in the for-profit college student population: although they account for less than one third of all college students, Black and Latino students represent nearly half of the students enrolled in proprietary colleges. In order to attract and enroll these students many for-profit colleges engage in unfair and deceptive practices, including deceptive advertisements and unrelenting recruiting, and leave students without the education and career development support they were promised. In order to combat these predatory for-profit colleges and protect students of color, we proposed:

  • Codification of robust borrower defense protections
  • Regulating spending on marketing and recruiting
  • Strengthen the 90/10 rule
  • Bolster the federal role in the regulatory triad

2. Data Collection and Transparency

The Department of Education’s current data on federal financial aid is limited. In order to make fully informed legislative decisions, more comprehensive data collection and rigorous analysis are necessary. We proposed:

  • Codification of a gainful employment standard
  • Study the student unit record ban to determine whether the department should track student loan defaults by race

3. Loan Servicing

Loan servicer misconduct comes in many forms, all of which harm borrowers. Student loan servicers commonly steer borrowers into payment plans that are cheaper for the servicer, and costly for the borrower. Additionally, vague communication, misapplied borrower payments, and other customer service misconduct cost borrowers dearly. Because Black students are more likely than other racial groups to borrow, and borrow more, for their education, the negative effects of poor student loan servicing are disproportionately damaging to student borrowers of color. To combat the harmful practices of loan servicers, we proposed:

  • Simplification of federal student loan repayment and increased access to repayment information
  • Statutory support for a Student Loan Borrowers’ Bill of Rights
  • More specific requirements for communications and customer service

4. Student Access and Success

Students of color face many barriers in accessing and succeeding in higher education. College degrees have become even more necessary over time to achieve upward mobility and live a healthy economic life in the United States, but students of color lag behind their white counterparts in achieving associate degrees or higher. To increase access for students of color, we proposed:

  • Removing the consideration of criminal background in the determination of eligibility for federal student aid
  • Expanding opportunities for DREAMers to pursue higher education, and allow undocumented students to access federal student aid
  • Increase resources and support to HBCUs, Tribal colleges and universities, Hispanic serving institutions, and Asian American and Native American Pacific Islander serving institutions

5. Student Safety and Rights

U.S. Department of Education data show that incidents of hate crimes on college campuses have been increasing over the years and target students of color. This type of crime pushes students of color out of school. To combat this problem, schools must proactively create safe spaces for students of color. To promote student safety, we proposed:

  • Require schools to prevent campus sexual violence, appropriately investigate and respond to instances of sexual violence, and support survivors
  • Require schools to protect students from hate crimes while ensuring First Amendment protections

To learn more about the Project on Predatory Student Lending’s work on racial justice, click here.

Project on Predatory Student Lending Clinical Instructor Quoted in The L.A. Times

Clinical Instructor Elieen Connor of the Project on Predatory Student Lending was quoted in a Los Angeles Times  article written by Michael Hiltzik. The article, “SEC gives former execs of Corinthian Colleges, a massive scam, slaps on the wrist” discusses the Securities and Exchange Commission’s (SEC) settlement with two former senior executives at Corinthian and how the settlement’s failure to “appropriately hold these executives accountable” follows a pattern in the Trump administration’s tolerance of for-profit colleges.

Excerpt from the article:

“Just comparing the slap on the wrist that the executives have gotten from the SEC to the plight of the students is pretty outrageous, both in absolute and relative terms,” says Eileen Connor of the Project on Predatory Student Lending at Harvard Law School, which has been representing many of the students in court.

. . .

“Clearly there’s been a change in the view at the SEC about culpability and consequences for these people who extract so much taxpayer money and then harm hundreds of thousands of students,” Connor told me. The Education Department has even started to seize earned income tax credit payments from former students to pay for their student loans, even when they have applications for relief pending, she says.

“It seems that the department will go to the ends of the Earth to squeeze money from these students,” Connor says. “When it comes time to hold people accountable who actually were responsible for this situation, it’s a slap on the wrist.”

My Student Loan Truth: Rick’s Wyotech Story

Via the Project on Predatory Student Lending 

Source: Flickr

In our Student Loan Truth blog series, our clients share what they really got from their for-profit college and how the debt affected them. Their experiences demand a public reckoning on student debt and an end to the predatory practices of for-profit colleges.

This month we interviewed Rick Dobashi, who attended Corinthian-owned WyoTech in San Jose, California from 2011-2013. Rick is part of our class action case Calvillo Manriquez v. DeVos, which represents students who were cheated by Corinthian Colleges (WyoTech, Heald, and Everest).  Even though a judge ordered the Department of Education to stop collecting on the fraudulent loans of certain Corinthian students in May, the Department continues to fight back with its latest appeal this month.

This is Rick’s #StudentLoanTruth

What made you decide to attend WyoTech?

I went to WyoTech because I saw all these great opportunities advertised – high pay, advanced training, how many jobs are out there, things like that. I wanted to work on something I’m passionate about, so I enrolled in a program for working on high performance cars.

What was the education like at WyoTech?

Once I really got into the program, I started to realize that they weren’t telling us the truth. The few times we actually got to work on cars, they weren’t even up to date, never mind high performance – all built in the 70s and 80s. They also cancelled a lot of the car classes and basically forced us into other, unrelated programs.

It was pretty clear WyoTech just wanted to just us in the door and get our money. They didn’t care about the students or our education.

How did WyoTech affect your employment prospects?

After I finished the program, I went to start looking for jobs and found that those high paying jobs they promised us didn’t exist. They sent us job listings for washing cars – that is if they even had anything to with cars at all.

What I’m doing right now has nothing to do with WyoTech or cars. I’m self-employed and own my own retail tobacco business. I managed to do that despite WyoTech, not because of them.

How has this experience affected your life?

I walked out of there with a $20,000 bill and nothing to show for it. It caused a lot of credit problems for me. Even back when the housing market was somewhat affordable, I couldn’t buy anything because my debt to income ratio was too high. It’s been a difficult rebuilding process for a long time, trying to make ends meet.

You had friends who went to WyoTech at the same time as you, yet they had their loans cancelled and you haven’t received anything. How does that feel?

I feel robbed. If you buy something and it’s defective, you’re supposed to be able to return it. Instead, I’m being punished for trying to get an education and expected to pay over $20,000 for something I never received. We all went to the same school, had the same experience of being lied to. I don’t understand how the government can cancel these loans for some people, but not for others who were in the exact same situation. They should be cancelling all of the loans for these schools.

Some policy-makers doubt that for-profit colleges are a problem – what would you say to them?

This isn’t what education is supposed to be about. If you go to a school and are lied to and don’t get what you’re promised, you shouldn’t have to pay for it. Why should we be punished for trying to get an education, while these schools can just get away with lying and cheating?

Rick is one of many thousands of former Corinthian students who are still waiting for the debt cancellation they are owed, as the Department of Education continues to delay doing the right thing. The Project on Predatory Student Lending, along with advocates and elected officials across the country are urging the Department to Cancel Corinthian debts immediately.

 

Circuit Judge Wary of DeVos’ Student Loan Debt Formula

Via Courthouse News Service

Source: Pixabay

By: Nicholas Iovino

A Ninth Circuit judge suggested Friday that the Trump administration’s Education Department used a flawed formula to make defrauded students pay back at least some loan debt to the federal government.

“It certainly seems at least plausible to say what was being compared here were apples and oranges, and the number that was being used as the comparator was being taken out of context entirely,” U.S. Circuit Judge Marsha Berzon said during Friday’s hearing.

Berzon was responding to a Justice Department lawyer’s argument that the method used to determine how much defrauded students should pay back in loan debt was both fair and practical.

Education Secretary Betsy DeVos is appealing a May 2018 court order forcing her to stop collecting loan payments from students who were misled about post-graduation job prospects by the now-defunct, for-profit Corinthian Colleges.

In December 2017, the Education Department announced it would reverse an Obama-era rule that gave full debt forgiveness to students deceived by Corinthian Colleges, a private 100-campus institution that collapsed in April 2015 after multiple state and federal investigations exposed its fraudulent marketing practices.

On Friday, a lawyer representing a nationwide class of more than 100,000 student borrowers argued the department’s new “Average Earnings” rule used an unfair formula to rescind the government’s previous offer of full debt relief.

Attorney Joshua Rovenger, of the Legal Services Center of Harvard Law School, said the department only used earnings data from 2014, when some students were still in school, and compared it to average earnings of graduates from other colleges, including those who now work minimum-wage jobs with their degrees and certificates.

Additionally, Rovenger argued, the department failed to account for graduates who work in fields that have nothing to do with their areas of study.

Justice Department lawyer Joshua Salzman countered that the use of existing data to assign value to each program was the most practical way to ensure borrowers only get compensated for “actual harm suffered.” The department maintains that cancelling all of the students’ loan debt would divert resources from important educational programs.

“What the plaintiffs are asking for is an assumption that everyone got zero value,” Salzman told the circuit judges.

Despite the lawyers’ focus on the fairness of the formula, U.S. Magistrate Judge Sallie Kim blocked the “Average Earnings” rule for a different reason – because the Education Department obtained the earnings data by sharing borrowers’ personal information with the Social Security Administration in violation of the Privacy Act.

Challenging that finding, Salzman argued Friday that the “end product” of the data exchange is more important than how the data was obtained. Salzman insisted the result was “aggregate earnings data,” not individualized, personally identifiable information.

That argument didn’t go over well with Berzon, who pointed out that personally identifiable information was shared with the Social Security Administration in the first place.

When Salzman explained how “end-product” data was used “to determine how much relief individual borrowers should get based on the program,” Berzon interrupted.

“There you go! Individual borrowers! It ended up with individual borrowers,” Berzon exclaimed.

But Salzman insisted exemptions in the Privacy Act allow the government to use citizens’ private data for “routine uses” and “programmatic purposes.”

Rovenger countered that the Privacy Act also requires the government to notify people when it shares their private information, and the department’s “general disclosures” on loan applications and borrower defense claim applications were insufficient.

“We urge this court to continue protecting these students and affirm the injunction,” Rovenger said in his final pitch to the panel.

U.S. Circuit Judge Richard Paez and U.S. District Judge Gary Feinerman, sitting by designation from the Northern District of Illinois, joined Berzon on the panel.

The panel did not indicate when it would issue a ruling.

After granting the plaintiffs’ request for an injunction last year, Magistrate Judge Kim declined to revive the prior Obama administration policy that would completely wipe out the students’ loan debt. In October, Kim granted the borrowers’ motion for class certification, allowing a nationwide class of approximately 110,000 students to team up in their lawsuit against the Education Department.

Harvard Law School sues U.S. Department of Justice over document access

Via PennRecord 

Source: Wikimedia Commons

By: Jenie Mallari-Torres

A Harvard law project is suing the United States Department of Justice, citing alleged breach of duty.

The Project on Predatory Student Lending of the Legal Services Center of Harvard Law School filed a complaint on Dec. 7 in the U.S. District Court for the Western District of Pennsylvania against the United States Department of Justice for alleged violation of the Freedom of Information Act.

According to the complaint, in June 2016 the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School submitted a request under the Freedom of Information Act to defendant seeking documents produced for the government in discovery in its lawsuit against Education Management.

However, plaintiff claims months have passed — long after its statutory deadline for responding to its request had expired — and defendant has refused to produce any documents, offering a series of conflicting reasons as to why it was withholding the documents.

The plaintiff holds the United States Department of Justice responsible because the defendant allegedly failed to make a determination with respect to the FOIA request within the applicable time limit and failed to release responsible, non-exempt records.

The plaintiff requests a trial by jury and seeks an order to conduct a reasonable search for records and promptly produce records; grant of full fee waiver to the Project, award of costs, attorneys’ fees and such other and further relief as the Court may deem just and proper. They are represented by Eileen Connor, Toby Merrill and Stephen Emedi of the Legal Services Center of Harvard Law School in Jamaica Plain, Massachusetts.

The U.S. District Court for the Western District of Pennsylvania Case No. is 18-1642.

Trump Administration Stymies Release of Salary, Loan Debt Data from Certain Colleges, Advocates Say

Via CNBC

By: Annie Nova

At a recent conference on financial aid, Education Secretary Betsy DeVos said that every school should help its students graduate with high-quality career prospects and little debt.

Students should be equipped, she added, with information that allows them to be responsible consumers. “They need to have the best possible tools, data, advice and support,” DeVos said, at the Georgia World Congress Center in late November.

Yet at another session at the same conference, Cynthia Hammond, a top Education Department official, said the agency wouldn’t be releasing student debt information on certain programs. “We will not be doing another round of debt-to-earnings rates at this time,” Hammond said to the audience.

Career education programs, including most for-profit colleges, are required to disclose debt and earnings data to prospective and current students, as part of the so-called gainful employment regulation. Under the rule, poor-performing programs are at risk of losing their federal funding.

The regulation is intended to provide students, “with the best information possible when they’re making one of the biggest investments they’re ever going to make,” said Michael Itzkowitz, a senior fellow at Third Way, a think tank in Washington.

The Education Department under DeVos has proposed eliminating the rule. Yet the soonest any such change could go into effect is July 2020, and so advocates were alarmed by Hammond’s comments at the conference. The department has already pushed back the date that schools need to publicly share their gainful employment information.

Critics of DeVos say the delays in data disclosure are another example of her siding with the for-profit industry.

The department can’t access the debt-to-earnings data on different programs because its agreement with the Social Security Administration — which provides the information — has lapsed, said Education Department Press Secretary Liz Hill. She noted that a request to the agency to renew the agreement in March went unanswered.

A spokesman for the Social Security Administration said the agency notified the Education Department in May that it would not enter into a new agreement. He declined to comment further, citing ongoing litigation.

However, no official agreement between the Social Security Administration and the Education Department is needed for the agencies to exchange the gainful employment data, said Eileen Connor, the litigation director at Harvard University’s Project on Predatory Student Lending.

She called the department’s most recent explanation, “a complete smokescreen for DeVos to be able to accomplish the gutting of the gainful employment regulation.”

At the financial aid conference, Hammond explained that the new disclosures certain schools need to display on their websites no longer must include data on student debt or job placement rates.

Half of student loan borrowers from for-profit colleges wind up in default, according to the Brookings Intuition. In a recent report to Congress, the Department of Education’s Inspector General Kathleen S. Tighe said she disagreed with the department’s proposal to rescind the gainful employment regulation without an adequate replacement. She pointed out that for-profit schools have misrepresented their job placement rates and continue to be a place of fraud and abuse.

The Obama administration aggressively enforced the gainful employment regulation in an effort to hold for-profit schools accountable by forcing them to prove their graduates were able to repay their student debt.

The first round of debt and earnings data was released in 2017. More than 750 programs failed the test. For example, graduates with an associate’s degree in graphic design from the Art Institute of Pittsburgh typically earn less than $22,000 a year and have over $40,000 in federal student loan debt, the Education Department found.

Under the rule, schools which fail the test two years in a row are cut off from federal funding. Since the department is not conducting another debt-to-earnings analysis this year, however, no program has lost eligibility under this regulation.

The threat of losing government funding forced schools to improve their value, said James Kvaal, president of The Institute for College Access & Success.

Colleges slashed tuition, offered more scholarships, implemented free trials and worked harder to meet industry standards, he said.

“That’s why we’re very troubled that the Department of Education is turning a blind eye to its obligation to enforce this rule,” Kvaal said.

ITT Tech Students Score Victory in Bankruptcy Settlement

Via The Washington Post

Source: Flickr.com 

By: Danielle Douglas-Gabriel

As creditors of ITT Educational Services fight over the remaining assets of the defunct for-profit college operator, one group has secured a significant victory in the bankruptcy proceedings: former students.

On Wednesday, a federal judge gave final approval to a settlement that will erase nearly $600 million that 750,000 students owed ITT Technical Institute. The agreement, which was first announced in January, will also refund $3 million that students paid the for-profit chain.

Before shutting down in 2016, ITT issued students “temporary credits” to cover remaining tuition after federal and private student loans were taken into account. These credits were allegedly marketed as grants, but debt collectors pursued students for the money even after the company filed for bankruptcy.

“ITT routinely lied to hundreds of thousands of students,” said Lorenzo Boyland, 40, who attended ITT Tech in Tennessee from 2008 to 2010. “They targeted people who were eligible for federal loans and grants — including low-income people and veterans like me — and took advantage of our dreams and ambitions.”

Boyland is among the students involved in the lawsuit filed against ITT Educational Services last year to join the line of creditors, federal regulators, state attorneys general and employees seeking redress from the company.

Attorneys for the students asserted a $1.5 billion claim against the company for consumer-protection violations and breach of contract, and asked for status to cover anyone who attended ITT Tech between 2006 and 2016.

Wednesday’s agreement recognizes the claim. If there is money in the estate to pay unsecured claims — debts that are not assured payment — at the end of the bankruptcy, students would receive a share.

In the meantime, ITT’s estate has notified students who are eligible for the debt cancellation, according to the Project on Predatory Student Lending at Harvard Law School, a legal aid group that worked with the law firm Jenner & Block to represent the students.

“This settlement does more for the cheated students of predatory for-profit colleges than [Education Secretary] Betsy DeVos has done in her entire administration,” said Toby Merrill, director of the Project on Predatory Student Lending. “At a time when students are being ignored by their government, ITT students stood up to this predatory college themselves and secured the relief they are owed.”

Merrill is calling on DeVos to forgive the federal loans of ITT Tech students who have petitioned the U.S. Department of Education to cancel their debt under a statute known as borrower defense to repayment. The law, which dates to the 1990s, wipes away federal loans for students whose colleges used illegal or deceptive tactics to get them to borrow money to attend. Advocates for the students say ITT Tech did just that.

The chain was being investigated by more than a dozen state attorneys general and two federal agencies for alleged fraud, deceptive marketing or steering students into predatory loans. That legal morass led an accrediting body to threaten to end its relationship with the chain, which resulted in the Education Department curtailing ITT’s access to federal student aid.

Weeks later, the publicly traded company closed 137 campuses that served 35,000 students and employed 8,000 people. And days after that, the company filed for bankruptcy protection to liquidate its business.

In the wake of the school’s collapse, ITT Tech students have submitted more than 13,000 applications for federal debt relief, though only 33 have been approved, according to the legal aid group.

The Trump administration has stymied efforts to grant relief by refusing to implement an Obama-era revision of the debt-relief rule that sought to simplify the process and shift more of the cost of discharging loans onto schools. DeVos issued a more restrictive rule earlier this year, but advocacy groups and state attorneys general are fighting to have the courts force implementation of the Obama rule.

“While this settlement is a victory, we are still paying federal student loans that funded a school that no longer exists,” said Boyland, a veteran who amassed $52,000 in federal and private loans pursuing an associate degree at ITT Tech. “All I’m asking for — all any of us are asking for — is a fair shot and a fresh start. I just hope the Department of Education is listening.”

Borrowers Face Hazy Path as Program to Forgive Student Loans Stalls Under Betsy DeVos

Via The New York Times 

Source: iStock

By: Stacy Cowley

The students attended institutions with pragmatic names like the Minnesota School of Business and others whose branding evoked ivy-draped buildings and leafy quads, like Corinthian Colleges. Tens of thousands of them say they are alike in one respect: They were victims of fraud, left with useless degrees and crushing debts.

Now the government program meant to forgive the federal loans of cheated students has all but stopped functioning.

No Education Department employees are devoted full time to investigating borrowers’ complaints, according to three people familiar with the agency’s operations. Instead, the agency’s staff has fought in court to reduce the amount of relief granted to some students and to halt a rule change intended to speed other claims along.

That has left more than 100,000 claims for relief in limbo, according to the Education Department’s most recent data.

“It’s just dream-crushing,” said Meaghan Bauer, who owes $45,000 for her time at the New England Institute of Art. The for-profit school, in Brookline, Mass., closed last year and was sued on fraud charges by the state attorney general in July.

“I can’t afford to go back to school,” Ms. Bauer, 27, said. “Will I ever be able to buy a house? Or get married? I spent so much time working on a useless degree, and it could ruin me financially for the rest of my life.”

The relief program, called borrower defense, became a popular way for students to seek debt forgiveness after several major for-profit schools went bust in recent years. During the Obama administration, the Education Department approved about 30,000 claims, more than half of them in the final two weeks before the new administration took over. All of those borrowers had their loans fully forgiven.

But President Trump’s education secretary, Betsy DeVos, who before taking office invested in companies with ties to for-profit colleges and student-loan debt collectors, has derided the program as a “free money” giveaway and vowed to make changes. She has also appointed a former dean of DeVry University — a for-profit school that is the subject of some 10,000 fraud claims by former students — to oversee the unit that runs the program.

As of mid-2018, her department had approved only 16,000 claims, and Education Department officials confirmed that about 15,000 of those were granted partial forgiveness. Tens of thousands more still await a decision.

“There’s nothing in the regulations to stop the secretary from slow-walking the processing of claims,” said Clare McCann, a senior policy adviser at the department during the Obama administration. “I’m positive there will be more litigation from borrowers who have been sitting in the backlog.”

Under President Barack Obama, the Education Department approved claims involving three schools. In nearly two years, the Trump administration has not granted approvals to students from any additional schools, even failed institutions like the Minnesota School of Business, which shut down after a state court ruled that it had misled students and broken state fraud laws.

The department’s attempts to reduce the amount of forgiven debt and block a new forgiveness rule have drawn rebukes from federal judges.

A judge in California found that the department had illegally obtained data from the Social Security Administration on the earnings of former Corinthian Colleges students as it sought to offer some of them only partial loan relief. Last month, the judge granted class-action status to 110,000 former Corinthian students who have applied to have their loans forgiven and may have been granted partial relief.

Also last month, a federal judge in Washington told the department to institute a rule written by the Obama administration requiring a “clear, fair and transparent” process for handling borrowers’ loan discharge requests. The rule also orders the department to automatically forgive the loans of certain students who were enrolled when their schools closed or who withdrew shortly before then, without requiring borrowers to apply for that relief.

But even after that court victory, critics of the Education Department are skeptical that there will be much progress.

“This rule is only as good as the administration’s intent to implement it,” said Toby Merrill, the director of Harvard Law School’s Project on Predatory Student Lending, which has represented dozens of borrowers in lawsuits against schools and the Education Department.

Liz Hill, an agency spokeswoman, said the Education Department would comply with the court’s decision and carry out the new rule “soon.” But she said Ms. DeVos considered the rule “bad policy” and intended to rewrite it.

Many applicants whose claims have lingered might not get much help from the new rule, anyway. The crux of it — establishing a federal standard for determining if a borrower was defrauded — applies only to loans made in 2017 and beyond. Borrowers with earlier loans must prove that their school broke a state law.

Evaluating those claims “is incredibly complex and takes time,” Ms. Hill said.

Borrowers have sought loan forgiveness after attending institutions large and small — from DeVry, which boasts on its site that it has awarded more than 300,000 degrees, to the Marinello Schools of Beauty, a defunct cosmetology chain that the government said had committed student loan fraud. Julian Schmoke, the former DeVry dean who is the department’s enforcement chief, has recused himself from issues related to DeVry, a department spokesman said.

So far, the program has forgiven nearly $535 million in debt, meaning the government absorbs the loss. That’s one reason Ms. DeVos has said the program should be overhauled.

“Students who have been defrauded and suffered harm should absolutely be made whole,” Ms. Hill said. “The department also has a duty to safeguard taxpayer dollars. It would be irresponsible to give 100 percent relief to every claimant without first assessing their claim and understanding whether or not harm was suffered.”

 

The Education Department is the biggest lender to Americans who borrow for college, with more than $1 trillion going to 33 million students. In the fine print of its promissory notes, the agency spells out its terms: Borrowers must repay what they owe even if they drop out, are unhappy with their education or can’t find a job in the field they trained for.

But there’s one escape clause. If borrowers were significantly misled by their school, they can ask the government to forgive their loans. Just as a bank appraises a house before it issues a mortgage, the Education Department is supposed to ensure that the programs it effectively funds are legitimate.

The provision was mostly overlooked for decades. Between 1995 and 2015, the department received only five such claims, according to a report from the agency’s inspector general. But after the Obama administration and a group of state attorneys general cracked down on vocational schools that lured students in with false promises, several large chains collapsed.

Corinthian was the first. In May 2015, it went bankrupt and closed all of its campuses, leaving 350,000 recent students with job training they called subpar and credits that most other schools would not accept. An activist group, the Debt Collective, dusted off the borrower defense rule and mobilized thousands of former Corinthian students to file claims.

Unable to deal individually with so many cases, the Education Department hired a special master and began to develop a system for investigating and adjudicating claims. It also announced that many Corinthian students would qualify to have their debts erased.

“You’d have to be made of stone not to feel for these students,” Arne Duncan, then the education secretary, said in June 2015. “We will make this process as easy as possible for them.”

The complex work of evaluating the Corinthian claims has taken time. By January 2017, the department had approved nearly 32,000.

But when Mr. Obama’s administration ended, about 41,000 complaints still awaited review. The Education Department had granted relief for borrowers who met specific criteria at two other schools, ITT Educational Services and American Career Institute, but it had not delved into thousands of claims involving other institutions.

After Mr. Trump took office, the existing claims sat untouched for nearly a year as tens of thousands of new ones arrived, according to agency documents.

In December, Ms. DeVos’s department approved nearly 13,000 claims, mostly from Corinthian students, under the criteria established by the Obama administration — but to many, she granted only partial relief. Since then, the department has approved only 4,000 more applications.

Those approvals have barely put a dent in claims against ITT, one of the nation’s largest for-profit educational companies before it closed down in September 2016, just before the start of a new school term.

In January 2017, just days before Mr. Trump’s inauguration, the department’s borrower defense unit circulated a 14-page memorecommending that the debts of some ITT students be fully forgiven. The value of the education the school provided them was “likely either negligible or nonexistent,” the investigators concluded.

On that recommendation, the department forgave the debts of 33 ITT students. It has not yet taken action on claims from 13,000 others, according to data sent to members of Congress.

Joseph White is among the ITT students who say they were cheated. He filed a claim with the Education Department three years ago and has heard little since.

Mr. White, 41, of St. Louis, graduated in 2008 with a bachelor’s degree in software engineering. But when he landed a position as a web developer, he quickly discovered that he lacked the skills to do his job.

Instead of teaching students to program computers, Mr. White said, instructors had handed out sheets of code and simply had the students retype them. At one final exam, the instructor stood at the front of the classroom and read the answer key aloud, he said.

“My degree,” he said, “was a sham.”

To finance that degree, Mr. White took out loans totaling more than $80,000.

Getting to Know You: Kelly Ganon

Via  adMISSIONS: HLS

Kelly Ganon is a current 3L and one of our Admissions Fellows. We recently sat down to hear her reflections on her HLS experience. Read on to learn about how she navigated the opportunities at Harvard, and her advice for prospective students!

Tell us about your path to Harvard Law.

When I was a high school freshman, I joined my high school’s mock trial team. I know how corny this sounds, but it’s true: the first time I stood up in a courtroom and gave a (fake) opening statement, I knew I had found what I wanted to do with my life. As I headed to college, my primary goal was to see the law from as many angles as possible. I attended Northeastern University, in part because the school has a robust internship program built into its undergraduate curriculum. Through that program, I spent half of my third year working for federal prosecutors at the U.S. Attorney’s Office in Boston, and half of my fourth year in Switzerland helping to train public defenders in developing countries with a Geneva-based NGO. When I returned stateside, I finished up my classes and returned to the U.S. Attorney’s Office in Boston full-time as a paralegal. I provided litigation support in the Economic Crimes Unit there for two years before shipping off across the Charles River to start at HLS.

Why did you pick HLS?

Like many prospective HLS students, at the end of my admissions cycle, I was faced with a choice between a Harvard education and some sizable scholarships elsewhere. As fortunate as I felt to be in a position where I couldn’t make a bad choice, for a period of time I was paralyzed with fear that I wouldn’t make the best choice. I reached out to every HLS alum in my personal and professional networks (and even some folks I’d never met before) and asked them for their thoughts. They were at various stages of their careers, but each and every one of them talked about the many doors that this institution had opened for them. They talked about the career flexibility they felt they had as a result of the enormous Harvard network and the top-notch educations they received. In one conversation I’ll never forget, a prominent alumnus I was lucky enough to get on the phone said, “Kelly, let’s get real. If you go anywhere else, you’re going to be sitting in your 1L classes and day dreaming about being at Harvard.” In my heart of hearts, I knew he was right. I’ve never looked back.

Have you been able to work closely with professors? How are those relationships established?

My best working relationship with an instructor came through my 2L fall semester at the Consumer Protection Clinic at Harvard’s Legal Services Center (LSC). Like all of the clinical instructors at LSC, Roger Bertling is both a teacher and a practitioner, so he is able to bring theory and practice together in a way that I found to be incredibly exciting. In my view, the two best things about forging a good relationship with a clinical instructor are first, that they are able to provide immediate and constant feedback on your work in a way that academic professors who give one assessment at the end of a semester cannot, and second, that as they see you growing as an advocate, they are able to give you increasing responsibility in real time. But there are a lot of different ways that students can form close academic and/or professional bonds with professors outside of the clinical setting. For example, I have a friend who hit it off with a professor when she was a student in his 1L reading group. She worked as his Teaching Assistant during the fall of her 2L year, and he later agreed to supervise her independent writing project — so they’ve now worked together in three different capacities. Office hours are always an option, too. Every professor who is teaching in a given semester has office hours weekly, and many do not require students to sign up in advance. So if there is a professor whose work you find particularly interesting, you can often easily seek them out regardless of whether you are taking a class with them.

What do you pursue outside of the classroom? How do you balance activities with coursework?

In addition to giving tours and leading info sessions as an Admissions Fellow, I am an Executive Editor for the Harvard Law & Policy Review and serve as a committee chair for the Women’s Law Association. Off campus, I spend most of my time at the dog park with my 2 year-old Black Lab, Luna, and distance running. Of course, it can be hard to balance law school and extracurriculars. But even during the busiest times of the school year, I have found that I’ve been able to make time for the activities and people I love as long as I am disciplined about it. I block out time in my schedule every week to do non-law school things, and I hold myself to it — no matter if that means staying up a little later or waking up a little earlier to read that one last case before class. And for my fellow runners reading this blog, my best advice is to sign up for a couple of races for weekends during the school year! Having a race entry on the books will keep you motivated to hit the road even when the coursework starts to feel overwhelming.

What is one piece of advice you would give someone who is considering applying to HLS?

Make sure that the person you present through your application materials actually sounds like you! Given the kinds of accomplishments people tend to have if they are competitive candidates for admission at top-tier law schools, putting yourself in the running against them for a spot in the incoming class can feel immensely intimidating. You might be tempted to massage your application materials until you look like a “typical” candidate. But typicality is not a virtue for a school that is focused on being exceptional. Additionally, don’t be too hard on yourself if you feel like you’re not giving off the “I can be a successful law student!” vibe at all times. I was positive I’d blown my chances at Harvard because I made a VERY lame joke in my admissions interview. But here I am, a rising 3L, still making terrible jokes.

A Winning Streak for Student Borrowers

Source: Pexels

By: Casey McTiernan

Students Won Several Major Victories This Month Against the Department of Education.

After years of delay by the Department of Education, student borrowers represented by the Project on Predatory Student Lending are finally winning their rights in courts. On four separate occasions this month, judges rebuked the Department, struck down illegal policies, and ruled in favor of students.

These recent rulings and decisions demonstrate that student borrowers have, and can enforce, their rights against the Department of Education and predatory for-profit colleges. These wins are a testament to our clients’ perseverance and willingness to stand up to the Department and drive change for student borrowers who attended for-profit colleges across the nation.

In the past three weeks alone, student borrowers won the following cases:

The 2016 Borrower Defense Rule is Now in Effect.

Students thwarted the Department of Education and the for-profit college industry’s attempts to prevent the implementation of the 2016 borrower defense rule. This rule includes a set of important protections for student loan borrowers from predatory schools, including their right to bring their claims in courts instead of in arbitration if their school participates in the federal student loan program. The Department finally backed down from its stubborn delays after all of its arguments were rejected by the court. The judge also rejected an industry attempt to stop the 2016 borrower defense rules from taking effect. As a result, the rule took effect on October 16, 2018 after more than a year of illegal delays.

These victories are a rebuke to both the Department of Education and the for-profit college industry. Students did not stop fighting to get this rule implemented, and now, because of their willingness to fight, these important and long-delayed rules are in effect.

Read more about the borrower defense rulings and the cases Bauer v. DeVos and CAPPS v. DeVos.

The Department Cannot Seize Tax Refunds from Borrower Defense Applicants.

On October 25, 2018, a federal judge ruled that the Department of Education had illegally taken the tax refunds of two former Corinthian College students to pay their student loans, without addressing the assertion, made in borrower defense applications, that their loans are fraudulent and unenforceable. As a result of this ruling, all student loan borrowers are protected from having their income tax credit seized to pay their federal student loans while their borrower defense applications are pending. This win is one step toward stopping the Department’s long-standing and utter disregard for the rights of students who have been subjected to the harmful practices of the predatory for-profit college industry.

Read more about the victory in Williams v. DeVos.

Corinthian Colleges Students Win Class Certification, and Elected Officials Call on the Department to Cancel All Corinthian Debt.

On October 15, a judge certified a class of Corinthian Colleges borrowers, allowing these students to team up to fight for the full loan cancellation they legally are owed. The Project on Predatory Student Lending and Housing and Economic Rights Advocates (HERA) represent the students in the class action lawsuit Calvillo Manriquez v. DeVos.

That same day, a group of elected officials and organizations from across the country called on the Department of Education to cancel the debts of all Corinthian College students once and for all.

Read more about the #CancelCorinthian campaign.

Delayed Obama-Era Rule on Student Debt Relief Is to Take Effect

Via The New York Times 

 

Source: Flickr.com

By: Stacy Cowley

A long-delayed federal rule intended to protect student loan borrowers who were defrauded by their schools went into effect on Tuesday, after a judge rejected an industry challenge and the Education Department ended efforts to stall it any longer.

The new rule, finalized in the last few months of President Barack Obama’s administration, is intended to strengthen a system called borrower defense that allows forgiveness of federal student loans for borrowers who were cheated by schools that lied about their job placement rates or otherwise broke state consumer protection laws.

The new rule could expedite the claims of more than 100,000 borrowers, many of whom attended for-profit schools, including ITT and Corinthian, that went out of business in recent years.

“We’re really gratified,” said Eileen Connor, the director of litigation at Harvard Law School’s Project on Predatory Student Lending, which represented several student borrowers who challenged the department’s delay. “These regulations have a lot of critical protections in them for student borrowers and taxpayers.”

The new rule requires the Education Department to create a “clear, fair, and transparent” process for handling borrowers’ loan discharge requests, many of which have sat for years in the department’s backlog. It also orders the department to automatically forgive the loans of some students at schools that closed, without requiring borrowers to apply for that relief.

The rule was supposed to take effect in July 2017. Shortly before that deadline, the Education secretary, Betsy DeVos, suspended the rule and announced plans to rewrite it. But federal agencies must follow a specific process for adopting or changing rules, and Judge Randolph D. Moss, a federal judge in Washington, ruled last month that the Education Department had failed to meet that standard. The department’s decision to delay the rule was “arbitrary and capricious,” he wrote.

Judge Moss ordered the rule to take effect but suspended his ruling until he could hear arguments in a lawsuit brought by the California Association of Private Postsecondary Schools, an industry group whose members include for-profit colleges.

On Tuesday, Judge Moss rejected the group’s request for an injunction. That removed the last obstacle blocking the rule and put it into immediate effect.

A spokeswoman for the California trade group declined to comment on Judge Moss’s ruling.

Liz Hill, a spokeswoman for the Education Department, said that Ms. DeVos “respects the role of the court and accepts the court’s decision.” However, Ms. DeVos still hopes to rewrite the rule.

“The secretary continues to believe the rule promulgated by the previous administration is bad policy, and the department will continue the work of finalizing a rule that protects both borrowers and taxpayers,” Ms. Hill said.

The soonest any new rule written by Ms. DeVos’s department could take effect is July 2020, which leaves the Obama-era rule in place until then. Ms. Hill said the department would provide more information “soon” on how it would be carried out.

Of the 166,000 forgiveness claims that had been received as of June 30, nearly 106,000 were still pending, according to department data. The department rejected 9,000 applications and approved almost 48,000, discharging $535 million in student loan debt. Taxpayers absorb that loss.

The new rule tries to cushion the blow to taxpayers by requiring schools that are at risk of generating fraud claims to provide financial collateral. That part of the rule has been fiercely opposed by industry groups.

Legal fights about the rule’s nuances are likely to continue. In his ruling on Tuesday, Judge Moss wrote that his decision was “not the first (and presumably not the last) chapter” in the fight.

Defrauded Students Win Class Certification in Lawsuit Against DeVos

Via Courthouse News Service

Source: Flickr.com 

By: Nicholas Iovino

More than 100,000 students defrauded by Corinthian Colleges can team up to sue Education Secretary Betsy DeVos for rolling back Obama-era rules that provided full debt forgiveness, a federal judge ruled Monday.

U.S. District Judge Sallie Kim certified a nationwide class of approximately 110,000 students who claim the Education Department improperly used their private data to create a new Average Earnings rule that forces students to pay off at least some loan debt.

“It’s a recognition by the court that in fact this whole group of people was affected in the same way,” said plaintiffs’ attorney Toby Merrill, with the Legal Services Center of Harvard Law School in Jamaica Plain, Massachusetts.

Lead plaintiff Martin Manriquez sued DeVos on Dec. 20, 2017, the same day the Education Department unveiled a new formula requiring borrowers to pay back at least some debt based on the average earnings of graduates from each Corinthian Colleges program.

In May, Kim granted a preliminary injunction blocking the department from collecting on loans from more than 60,000 students who already applied for debt relief, but she refused to wipe out all of their debt as the case moved forward.

The U.S. Justice Department filed an appeal against the injunction and asked Kim to delay ruling on class certification until the Ninth Circuit decides that appeal. But Kim found the Ninth Circuit could benefit from her class certification ruling if it chooses to review the scope of the injunction. The rest of the case will remain on hold pending appeal.

In granting the injunction, Kim found it likely that the Education Department obtained income data from the Social Security Administration by improperly sharing borrowers’ personal information in violation of the Privacy Act of 1974.

Even if the appeals court disagrees with Kim’s finding on Privacy Act violations, it could also approve the injunction based on the department’s alleged failure to adequately justify revoking full debt relief for defrauded students, Merrill said.

“The Ninth Circuit can affirm on any grounds, so it has a panoply of options,” Merrill explained.

The Department of Education and Justice Department did not immediately return requests for comment Monday afternoon.

But the Education Department has previously said it never promised full debt relief. It said the new policy was enacted to help protect taxpayer money and make sure students are only compensated for “actual harm suffered.” The department further contends that privacy law exemptions allow it to use personal information for “programmatic disclosures” and “routine uses.”

Corinthian Colleges declared bankruptcy and collapsed in April 2015 after investigations by the Department of Education and numerous state attorneys general revealed fraud at more than 100 college campuses. The for-profit institution was accused of misleading students about the value of its educational programs and their ability to get higher-paying jobs after completing those programs.

Some students borrowed up to $100,000 for an education the plaintiffs have denounced as “worthless.”

Merrill said Corinthian and other for-profit colleges specifically targeted vulnerable groups of people, including single moms and communities of color.

Securing full debt relief is critical, the borrower advocate added, because many former students must choose between basic life necessities and paying off the debt. A failure to make payments on time can lead to garnished wages and bad credit, which makes it harder to find housing or buy a car to get to and from work.

“People are really suffering,” Merrill lamented.

In the opening brief for its appeal, the U.S. Justice Department wrote that Kim’s injunction is unjustified because there is “no ongoing violation of the Privacy Act” or imminent threat of future violations.

“A past violation of the Privacy Act does not ‘taint’ the use of an otherwise valid rule,” the Justice Department argued in its brief.

Last month, another federal judge in Washington D.C. blocked the Education Department from delaying the borrower-defense rule, which lets all students defrauded by for-profit colleges apply for and obtain full debt relief.

California, New York and 6 Other States Side with Scammed Students in Battle with DeVos

Via MarketWatch 


Source: Flickr.com 

By: Jillian Berman

Several states are throwing their support behind scammed student-loan borrowers hoping for relief.

Led by Xavier Becerra, the attorney general of California, eight states including, Massachusetts, New York and Illinois, filed an amicus brief [last] Wednesday in a closely-watched class-action lawsuit challenging Betsy DeVos-led Department of Education’s approach to calculating relief for federal student-loan borrowers who say they’ve been scammed by their schools.

An amicus brief, also known as a friend-of-the-court brief, allows entities with an interest in the litigation to weigh in with what they believe to be relevant information about the case.

At issue in the case is whether the agency can legally provide only a partial discharge of federal student-loans a group of borrowers acquired to attend Corinthian Colleges, a for-profit college chain that collapsed in 2015 amid claims the school misled students about job placement and graduation rates. During the Obama administration these borrowers received a full discharge of their loans.

In the brief, the states’ attorneys general argue that these borrowers are entitled to full relief under the law, known as borrower defense, which aims to make federal student-loan borrowers whole who have been defrauded by their schools.

“Amici States have a strong interest in safeguarding the economic well-being of their residents who the Department has already determined are qualified for complete cancellation of their federal student loans because they were defrauded into attending various educational programs offered by Corinthian,” the state attorneys general write in the brief.

. . .

Other states, including Massachusetts and Illinois, provided the Department with thousands of pages of evidence that Corinthian violated the law in their state, according to the brief. What’s more, state attorneys general offices took pains to find residents who might be eligible for relief.

The states hired a company to the tune of at least $290,000 to coordinate contacting borrowers, according to the brief. They also created their own bespoke outreach efforts. For example, in Massachusetts, the attorney general’s office held 19 workshops across the state to help students fill out the claim form. They also called, emailed and mailed letters to borrowers who were likely qualified for relief.

The states “spent significant resources trying to ensure that people who were eligible for loan cancellation because of Corinthian fraud would get it,” said Eileen Connor, the director of Harvard Law School’s Project on Predatory Student Lending, one of the organizations representing the borrowers. “It’s just really outrageous that the Department really capriciously turned away from that.”

The policy being challenged in the suit would allow for borrowers determined by the Department to have received some benefit from their education — based on whether the average earnings of their Corinthian program is 50% or more of the earnings of a typical graduate in a comparable program — to receive only a partial discharge of their loans.

Read the full article here.

How It Feels When Students Stand Up to the Department of Education and Win

Via the Legal Services Center

Source: Pixabay

Meaghan Bauer and Stephen Del Rose, former students of EDMC-owned New England Institute of Art, were cheated by their school and left with a massive pile of debt.

Like the hundreds of thousands of students who were cheated by predatory for-profit colleges, they trusted in institutions like their school and their government. Their school not only let them down, but actively misled, cheated and harmed them. Then, the Department of Education doubled down on that harm. Under Betsy DeVos, the Department repeatedly delayed the implementation of a new Borrower Defense rule, which offered critical protections for students and would have allowed them to bring their case against their school to court on behalf of a class.

Meaghan and Stephen fought back. They filed a lawsuit against the Secretary of Education for illegally delaying a rule intended to protect borrowers’ rights. And this month, a federal judge agreed – ruling that the Department of Education broke the law when it delayed the rule.

When she learned of the ruling, Meaghan Bauer was elated. But despite her happiness about winning a major victory for students, Meaghan was still angry. She said:

We are supposed to be able to trust our government and know that when they make a new policy it is with our best interests in mind. It is really sad that the government dragged this out for so long and acted so childishly that they needed a judge to tell them that what they are doing is illegal. I hope this ruling reminds the government of its obligation to care for its citizens who are the future of this country, instead of focusing on lining the pockets of for profit institutions. They should admit they were wrong and take the necessary actions to remedy their policies and reestablish some of the faith in our government that has been lost.

Meaghan and Stephen are represented by the Project on Predatory Student Lending and Public Citizen. Click here to read more about their case.

The Lawsuits Challenging DeVos’ Anti-Student Higher Education Agenda

Via the Center for American Progress

By: Sara Garcia

Under the leadership of Secretary Betsy DeVos, the U.S. Department of Education has sought to unravel protections for college students. In an attempt to push back against the department’s dubious legal maneuvers, a number of state attorneys general, civil rights organizations, and advocacy groups have engaged the courts. The National Student Legal Defense Network (NSLDN), the Harvard Legal Services Center, the National Consumer Law Center, and others have sought to prevent the rollback of crucial regulations and bring more transparency to the department’s decision-making.

Earlier this month, a federal judge issued a blockbuster decision in one of these cases, ruling that the department had illegally delayed the Obama administration’s borrower defense regulation, which provides students who have been misled by their institutions the ability to seek relief from their federal student loans. While the judge has yet to decide if the department will need to begin implementing borrower defense, the decision is proof of the importance of challenging the extreme measures that Secretary DeVos and her department have taken to undo protections for students.

This column details some of the most troubling cases currently under review in the areas of consumer protection, accountability, student loan servicing, and civil rights.

Read the full article here.

Student Borrowers And Advocates Win Court Case Against DeVos

Via NPR

By: Elissa Nadworny and Anya Kamenetz

Source: Flickr.com

A federal judge ruled this week that Education Secretary Betsy DeVos’ delay of a key student borrower protection rule was improper and unlawful.

“This is such an important win for student borrowers and anyone who cares about a government that operates under the rule of law,” says Toby Merrill, of Harvard Law School’s Project On Predatory Student Lending. The judge is expected to order a remedy in the next week.

U.S. District Court Judge Randolph D. Moss sided with consumer advocates, two former students seeking relief from their loans and Democratic attorneys general from 19 states and the District of Columbia, who challenged the Trump administration’s postponement of Obama-era regulations governing “borrower defense to repayment.”

If you attend a school that misled you or engaged in other misconduct, “borrower defense” is the process of seeking relief from your outstanding student loans. The rule was created in the mid-1990s but remained obscure, producing very few claims, until the collapse of the for-profit Corinthian Colleges and ITT Tech beginning in 2014. That’s when the Obama administration updated and clarified how students were supposed to seek loan forgiveness. Since then, a reported 165,000 claims have been brought, and almost all of them pertain to for-profit colleges.

Since June 2017, DeVos has taken several actions to delay the Obama-era rule. The department has used that time to restart the rule-making clock and rewrite borrower defense to make it tougher for students to get debt relief. In particular, they introduced the idea that some students should only get some of their loans forgiven, depending on their current income. The new DeVos rule would take effect in mid-2019. In the meantime, claims are being reviewed and processed slowly, under the old, mid-1990s rule, with most students getting partial relief or none at all, according to a recent report by the Associated Press.

The judge ruled that DeVos’ delay was “unlawful” and “arbitrary and capricious.” With respect to the student plaintiffs, the judge found that the department’s actions: “have deprived” them “of several concrete benefits that they would have otherwise accrued under the Borrower Defense Regulations.”

In a hearing Friday, the judge allowed these two plaintiffs, Meaghan Bauer and Stephano Del Rose, to join — as defendants — a separate, ongoing case. In this case, a for-profit college industry group is suing to block the 2016 Obama-era rule.

The Department of Education did not immediately respond to request for comment by NPR.

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Read more stories about the decision with quotes from Toby Merrill, a litigator at Harvard University’s Project on Predatory Student Lending, in the Washington Post and Marketwatch.com.

Project on Predatory Student Lending releases report on Veterans complaints about Kaplan Schools

Via Project on Predatory Student Lending 

For-profit colleges have exploited the promise of higher education by deceiving tens of thousands of students seeking a better life. One of the groups the for-profit industry has particularly targeted are veterans and servicemembers.

That is why the Project on Predatory Lending represented the Veterans Education Success organization to prepare a new report outlining the predatory actions of one for-profit institution, Kaplan Colleges and University, against veterans and servicemembers.

VES collected complaints from nearly 100 veterans who attended Kaplan-owned programs. Their complaints include things like:

  • Raising the costs on veterans once they enroll and failing to inform them of additional fees;
  • Misleading veterans about their military benefits covering the tuition costs, resulting in unexpected and burdensome debt; and
  • Borrowing money on behalf of veterans without their consent.

Unlike the for-profits colleges that are forced to shut down when their fraudulent behavior is exposed, Kaplan is still an active and functioning college. In fact, Kaplan University was just purchased by Purdue, a public university in Indiana, to conduct its online programs. And the Department of Education just approved this transaction, which will remove some of the protections for borrowers and taxpayers that apply only to for-profit schools not conducting business under the auspices of public entities.

We hope you will read the full report to understand the extent of the predatory behavior by Kaplan.

Click here to read the report.

Military servicemembers and veterans deserve our respect and gratitude. And, like all students, they deserve to seek higher education without facing fraudulent and unscrupulous companies trying to extract federal funds. Kaplan’s actions run directly counter to that. It’s time for the government to step in to help, or they too will have failed in their duty to support veterans who have sacrificed so much for us all.

LSC’s Project on Predatory Student Lending and Public Citizen Sue to Stop Education Department’s Illegal Regulatory Delay

Via Legal Services Center

The U.S. Department of Education broke the law when it announced a delay of a rule designed to protect students defrauded by predatory for-profit colleges and career training programs, two borrowers said in a lawsuit filed today in the U.S. District Court for the District of Columbia. The borrowers are represented by Public Citizen and the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School.

The lawsuit was brought by Meaghan Bauer and Stephano Del Rose, former students of the for-profit New England Institute of Art (NEIA) in Brookline, Mass. They allege that NEIA, which is owned by Education Management Corporation (EDMC), engaged in unfair and deceptive practices against them and other students that left them with a useless education, few job prospects and a mountain of debt. The students intend to bring suit against the school for its conduct in court, on behalf of a class. They also have asserted a federal right to have the Education Department cancel loans that the students obtained to attend the school based on the school’s unlawful conduct. The lawsuit seeks to invalidate the Department’s delay of the rule, and would allow the rule to take effect for all borrowers.

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