Court orders DeVos to cancel student loans in Mass. swindled by Corinthian colleges
Student advocates joined Massachusetts Attorney General Maura Healey on Friday after a federal court in Boston ordered US Secretary of Education Betsy DeVos to cancel loans to 7,200 Commonwealth people who were defrauded by Corinthian Colleges, a for-profit education company that firm its American campuses in 2015.
“This decision is a clear and powerful statement of the rights of student borrowers and a resounding rejection of the continuing and widespread refusal of the Department of Education to recognize these rights and to cancel fraudulent student loans.”
—Toby Merrill, Predatory Student Loans Project
“Thousands of Massachusetts students who were deceived by Corinthian finally had their time in court, and they won,” Healey said. noted in a report. “This historic victory for students will cancel federal loans for thousands of defrauded borrowers, mostly black and Latin students, targeted by a predatory for-profit school and abandoned by Secretary DeVos and the Trump administration.”
U.S. District Court Judge Leo T. Sorokin’s decision (pdf) in Vara vs. DeVos came nearly two years after he ordered the US Department of Education (ED) to stop collecting the loans because they were covered by a borrower’s defense claim filed by Healey.
Healey noted that his office has been working with Harvard Law School’s Predatory Student Loan Project since 2015 “to gain students the relief they deserve.”
Predatory Student Loans Project Director Toby Merrill also welcomed the judge’s decision in Friday’s statement, stating that “this decision is a clear and powerful statement of the rights of student borrowers, and a categorical rejection of the continuing and widespread refusal of the Department of Education to recognize these rights and set aside student loan fraud. “
“Our clients and the 7,200 Massachusetts students who have been deceived by Corinthian … have been waiting almost five years for the Department of Education to recognize their right to have their loans canceled,” Merrill said. “We thank Attorney General Healey for his long-term commitment to fighting for these borrowers, and look forward to the day when five-year battles and three lawsuits to write off blatantly fraudulent debts are no longer necessary.”
Longtime critic of the current Education Secretary, Senator Elizabeth Warren (D-Mass.) Tweeted that the decision “is a huge victory over DeVos and a victory for all student borrowers.”
As pointed out in the joint statement from Healey’s office and Project on Predatory Student Lending, Sorokin ruled that:
- ED cannot escape its obligations under the law by simply canceling the loans of people who are suing;
- Contrary to ED’s assertions, a federal court can review ED’s actions and inactions with respect to the borrower’s defense;
- ED must act in a coherent and rational manner and must explain his actions;
- “Overwhelming” evidence shows that ED has in the past repeatedly exercised its discretion to cancel federal student loans in response to an evidence-supported request from an attorney general;
- “Overwhelming” and “uncontradicted” evidence establishes that plaintiffs and their classmates have the right to cancel their loans due to Corinthian’s gross and widespread misconduct; and
- So that the students are no longer caught in “a game of ping-pong”, the court asked the agency to take action within 60 days according to the court order granting restitution to all borrowers.
The victory in Boston came as House Democrats failed Friday to override President Donald Trump’s veto on a bipartisan resolution to strike down DeVos’ tough new rules on student loan cancellation, which are expected to take effect on July 1. the veto.
In a statement in response to the unsuccessful waiver effort, Ben Miller, vice president of post-secondary education at the Center for American Progress, noted that “Secretary Betsy DeVos has repeatedly put the interests of exploitative schools ahead of students, and today almost the entire minority in the House has shown a willingness to side with her.”
“From the start, this administration has stood idly by while tens of thousands of additional borrowers are legally asking for relief,” he added. “And he denied significant relief to students no doubt ripped off by predatory actors like Corinthian colleges through countless formulas that do things like deny borrowers full relief so they don’t have negative income.”