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Judge Rules against DeVos for Corinthian College

In the case of the thousands of students defrauded by Corinthian College Inc., the Department of Education under DeVos tried to implement a new policy that would replace the Obama Administration’s “Borrower Defense to Repayment rule”. DeVos’s plan would prevent students from receiving a full discharge of the student loan debt they accumulated while receiving a useless degree. Instead, the student’s “need” would be determined by comparing the students’ earnings to their peers.

The DOE planned to implement this new plan starting next summer, but a federal judge halted their plans in May of this year. As reported in the Washington Post article “Courts halt DeVos’s partial student debt relief plan”, Danielle Douglas-Gabriel reported, “Magistrate Judge Sallie Kim of the U.S. District Court in San Francisco agreed that the Trump administration violated privacy laws by using Social Security Administration data to calculate loan forgiveness.”  This case was brought on by a legal services clinic at Harvard called The Project on Predatory Student Lending when they filed an injunction earlier in March. They argued that the data supplied by the Social Security Administration should be used for any other purpose than “to evaluate vocational programs” and that “denying full relief to Corinthian students is illegal”.

During the Obama Administration, The DOE provided an estimated 25,000 Corinthian students discharge from their loans who claimed they were defrauded. Under the Trump Administration, The DOE “has approved for discharge 12,900 pending claims submitted by former Corinthian Colleges, Inc. students, and 8,600 pending claims have been denied”(Improved Borrower Defense Discharge Process Will Aid Defrauded Borrowers, Protect Taxpayers, www.ed.gov).

A later hearing schedule in June determined that the Department of Education had to cease collecting debts from the students in these lawsuits.  It is unclear what new methods the DOE will employ to unfairly (and frankly illegally) collect on debts from borrowers already in dire financial situations.  The DOE was restricted from using Social Security information since it violated privacy laws, but they have not resigned their initiative to only partially relieve defrauded students.

 

Sources:

“Education Department ordered to stop collecting debts from defrauded Corinthian College students”. The Hill. http://thehill.com/regulation/court-battles/393222-court-orders-education-dept-to-stop-collecting-debts-from-defrauded

“Courts halt DeVos’s partial student debt relief plan”. Washington Post

https://www.washingtonpost.com/news/grade-point/wp/2018/05/29/courts-halt-devoss-partial-student-debt-relief-plan/?noredirect=on&utm_term=.315fe715c9c5