Corinthian College Class Action Stay Backed By Feds

A class action lawsuit challenging Corinthian College student loans is in the center of a debate over whether or not a stay on the class action lawsuit should hold or be lifted. Most recently, the Department of Education and Department of Education Secretary Betsy DeVos have argued that the stay should remain in place.

The Corinthian College loans class action lawsuit was filed by Martin Calvillo Manriquez. He claimed that students who had taken out federal loans for training programs at Corinthian College should have their loans forgiven, in accordance with a promise made by the Department of Education to fully forgive loans taken out by the students to attend the college.

Corinthians College is a for-profit institution that closed down in 2015 while it was being investigated by the federal government for allegedly misrepresenting graduates’ job placement rates so that the school could qualify for federal student aid.

According to Manriquez, the Department of Education has not fulfilled its promise. Allegedly, many loans from Corinthian students were not discharged, and the department went so far as to reverse its promise.

The Corinthian College student loans class action lawsuit says that, in December 2017, the Department of Education said that loans would not be forgiven, but that students would instead be granted a loan repayment based on the value of the education they received at Corinthians. Allegedly, this amount was calculated by comparing the average income of a Corinthians graduate with the average education of a student who attended a comparable institution. This strategy is reportedly called the “average earnings rule.”

A stay had been placed on the Corinthian College loan repayment class action lawsuit, one which the students had asked to have reversed. According to the students, the Department of Education had not heeded terms of the preliminary injunction that had been passed, which would require the department to stop collecting student loan repayments from Corinthian students.

According to the Department of Education, the department faced challenges implementing the injunction, because of how large-scale the department’s loan collection system is. The department went on to say that some of the challenges came from the fact that that the department works with third parties to collect loans, which led to technical difficulties. Allegedly, this led to some student loans to still be collected.
According to the department, the students have not sufficiently shown how lifting the stay will alleviate harm allegedly done by the department’s practice of continuing to collect some debts.

The Department of Education went on to say that the stay on the Corinthian College loans should not be lifted, saying that the Department would agree to send regular reports on its compliance with the injunction.

The Department of Education also said that the stay should stay in place because the Ninth Circuit court is considering the students’ Privacy Act claim and the students’ complaint regarding the “average earnings rule.” This decision will reportedly provide “significant, if not dispositive, guidance” on the legal issues in the case.

The students are represented by Joseph Jaramillo and Natalie Lyons of Housing & Economic Rights Advocates and Eileen M. Connor, Toby R. Merrill, and Joshua D. Revenger of the Legal Services Center of Harvard Law School.

The Department of Education Corinthian College Loan Repayment Class Action Lawsuit is Cavillo Manriquez, et al. v. DeVos, et al., Case No. 3:17-cv-07210, in the U.S. District Court for the Northern District of California.

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