Update – November 20, 2019 – Class Certified by California Federal Judge
United States District Judge William Alsup has certified a class that could swell to include as many as 150,000 student borrowers who, as the class action detailed on this page alleges, have been left to sit and wait while the Department of Education mulls over how to handle hundreds of thousands of loan forgiveness applications for those who attended defunct, for-profit colleges.
The class is defined as:
“All people who borrowed a Direct Loan or FFEL loan to pay for a program of higher education, who have asserted a borrower defense to repayment to the U.S. Department of Education, whose borrower defense has not been granted or denied on the merits, and who is not a class member in Calvillo Manriquez v. DeVos, No. 17-7106 (N.D. Cal.).”
Handed down on October 30, theorder granting class certificationsides with the plaintiffs with regard to the U.S. Department of Education’s argument that borrowers’ claims were too individualized to merit class litigation.
“Here, in contrast, plaintiffs do not submit only a threadbare allegation of harm,” Judge Alsup wrote. “Rather, they have identified a single uniform policy — namely, the Department’s alleged ‘blanket refusal’ to adjudicate borrower defenses — which ‘bridges all their claims.’”
Moreover, Judge Alsup, when presented with the defendants’ claim that the plaintiffs’ evidence amounts to “cobbled-together reports” that include cherry-picked information, found that there is one fact “no one disputes: the Department has decided zero applications since June 2018.”
According to the order, more than 210,000 borrower defense claims are currently pending, which Judge Alsup considered “especially striking” given the Department had decided nearly 30,000 defense applications between July 2016 and January 2017.
Excluded from the class are student loan borrowers who attendednow-shutteredCorinthian Colleges and are members of the class designated inCalvillo Manriquez et al. v. Devos et al.Law360 reports that Department of Education head Betsy DeVos and the department weredeclared in contempt with regard to that case and fined $100,00 for their minimal compliance with a court order to cease collecting loans from former Corinthian students.
The United States Department of Education and Secretary Betsy Devos are the defendants in a proposed class action lawsuit that alleges the department has abdicated its responsibility to address debt cancellation requests from students subject to for-profit college misconduct.
Filed in California’s Northern District, the suit states that more than 160,000 former for-profit college students have applied to have their federal student loans canceled on the basis of their school’s misconduct. To date, the Department of Education “has not granted or denied a single application” submitted since June 2018, nor has a timeline for doing so, the lawsuit says.
“The question in this case is whether the Department’s refusal to decide borrower defenses is lawful,” the suit reads. “It is not.”
At the heart of the allegations are for-profit schools such as ITT Technical Institute, DeVry University, Salter College and others, a number of which have since closed, that promised students high-paying jobs, state-of-the-art training and other opportunities for advancement. What students actually received, the complaint says, were “worthless products” that saddled them with crippling debt, damaged credit, emotional distress and less access to further financial aid.
As the plaintiffs tell it, the Department of Education and Secretary DeVos were responsible for keeping tabs on for-profit schools’ participation in the federal student aid program. Since January 2017, however, when DeVos began her tenure as department head, the Department “hit the brakes” on its process of reviewing and adjudicating claims from for-profit college students that were subject to a school’s misconduct, a “pause” the lawsuit asserts is more like a full stop.
“The Department has ignored the growing pile of borrower defenses, reduced its capacity to decide borrower defenses, and diverted its increasingly limited resources to un-do all of the prior administration’s work,” according to the case.
Capping off the distressing allegations, the plaintiffs further claim that former for-profit college students who have defaulted on their loans are subject to the Department of Education’s “extrajudicial” powers to garnish wages and seize tax credits. At the end of the day, the defendants’ apparent inaction shows that there no longer exists “any pretense that the government will protect these students,” the lawsuit says.
The case looks to cover a proposed class of individuals who borrowed a direct loan or Federal Family Education Loan (FFEL) to pay for college and have asserted a borrower defense to the Department of Education and whose borrower defense has neither been granted nor denied on its merits. Excluded from the proposed class are those who are presently class members inCalvillo Manriquez v. DeVos,No. 17-7106.