Department of Education, DeVos Sued For Delaying Student Loan Forgiveness

The Department of Education and Betsy DeVos, in her official position as U.S. Secretary of Education, have been hit with a class action lawsuit alleging that they have stalled the process of canceling student loan debts for colleges that closed their doors.

The plaintiffs say that the Department of Education has not allowed any loan cancellation applications since July 2018.

Plaintiff Theresa Sweet, who graduated from the Brooks Institute of Photography in 2006, alleges that the school “violated state law in various ways, including by misrepresenting students’ post-graduation income.”

Brooks closed its doors in August 2006 and 588 former students filed an application to cancel their student loans under the “borrower defense” program, offered by the Department. The Department of Education class action lawsuit states that all of these claims are still pending.

“Attending Brooks was the worst mistake of Ms. Sweet’s life. And now, as the Department sits on her borrower defense, Ms. Sweet is losing faith that the government will protect students like her,” the Department of Education class action lawsuit states.

Another named plaintiff, Tresa Apodaca, attended Heald College and graduated in 2010. Heald is a “Corinthian-owned school” and was the subject of numerous investigations by various government agencies. The school closed its doors after Corinthian was fined $30 million for “substantial misrepresentations.”

Apodaca applied for and was told that she would qualify for a borrower defense, however, “the Department has not granted her borrower defense application, provided her notice of a decision, or discharged her debt,” the Department of Education class action lawsuit argues.

The Department of Education class action lawsuit states that “According to the Department, as of December 31, 2018, there were 56,533 pending borrower defenses from former Corinthian students.”

The plaintiffs say more than 160,000 former for-profit college students have filed an application for the borrower defense, based on the misconduct of their schools, but the Department is not acting upon them.

The Department of Education class action lawsuit claims that “The schools promised high-paying jobs, state-of-the-art vocational training, and long and fulfilling careers,” but did not deliver on these promises.  

The Department was tasked with overseeing the colleges involvement in the federal student aid program, the plaintiffs argue.

“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,” the Department of Education class action lawsuit asserts.

By not addressing the applications for borrower defense, the Department has, in effect, damaged students’ credit and has reduced access to federal student aid, the class action states.

In addition, the lack of movement by the Department of Education on the borrower defense applications has “caused significant emotional distress, associated physical harm, and a loss of wealth and opportunity that students will never recover.”

The Department of Education class action lawsuit is not asking the government to arbitrate their borrower defenses. Instead, “they seek an order compelling the Department to start granting or denying their borrower defenses and vacating the Department’s policy of withholding resolution.”  

The plaintiffs filed this class action lawsuit against the Department of Education in violation of the Administrative Procedure Act.

The plaintiffs are represented by Joe Jaramillo and Natalie Lyons of Housing & Economic Rights Advocates and Eileen M. Connor, Toby R. Merrill, Kyra A. Taylor, and Joshua D. Rovenger of the Legal Services Center of Harvard Law School.

The Department of Education Student Loans Class Action Lawsuit is Sweet, et al. v. Elisabeth DeVos, et al., Case No. 5:19-cv-03674, in the U.S. District Court for the Northern District of California.

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