Pratt v. Cardona
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This lawsuit was voluntarily dismissed after the U.S. Department of Education agreed in March 2021 to end the previous administration’s unlawful partial relief policy for adjudicating borrower defense applications. The Department further agreed to grant borrowers who were impacted by that policy the full debt relief they are owed.
All affected borrowers should have received notice of 100% relief on their approved borrower defense applications by September 2021. Borrowers should have been informed that loans in the federal direct loan program related to their approved claims would be discharged by March 2022. Borrowers with other types of federal loans, such as Federal Family Education Loans (FFEL) or Perkins Loans, will also receive a full discharge on those loans, but the Department states that additional steps are needed and borrowers should await further directions on how to obtain relief. The Department further states that it is reviewing borrowers’ eligibility for a refund on payments already made on loans that have been approved for borrower defense relief. All approved loans will remain in forbearance and stopped collections status until discharge is completed.
PPSL continues to monitor the Department’s progress in completing discharges as promised.
About Pratt v. Cardona
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This case challenges the partial relief methodology for borrower defense introduced by the Department of Education in December 2019. The partial relief rule applies to people whose borrower defense applications are granted because their school cheated them. Under the rule, the Department only cancels a small part of most people’s loans, and forces them to repay significant portions of their bogus student loan debt.
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June 9, 2020: This case was filed in the United States District Court for the District of Columbia.
September 23, 2020: The District Court certified a class of borrowers who had received decisions under the 2019 partial relief methodology.
March 2021: This lawsuit was voluntarily dismissed after the U.S. Department of Education agreed to end the previous administration’s unlawful partial relief policy for adjudicating borrower defense applications.
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Student borrowers filed this case against the U.S. Department of Education. They seek to represent all borrowers who have had or will have the Department of Education’s partial relief rule applied to them. The students are represented by PPSL on Predatory Student Lending and Public Citizen Litigation Group.
This is the Department’s second attempt at devising a “partial relief” methodology that denies most relief to defrauded student borrowers. After failing to comply with a court order to stop using the first partial relief rule in 2019, then-Secretary DeVos was held in contempt of court with a $100,000 fine.
The 2019 rule uses a deeply flawed methodology, basing relief only on the average earnings of graduates of the applicant’s program, rather than considering any evidence of the harm suffered by students from their schools’ misconduct. This lawsuit follows a recently-proposed settlement in the lawsuit Sweet v. DeVos, in which the Department agreed to finally begin deciding the borrower defense claims of nearly 200,000 student borrowers who were cheated by their schools and have been waiting for relief.
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August 17, 2020: Plaintiffs’ Amended Complaint
November 2, 2020: Plaintiffs’ Motion for Summary Judgment
November 19, 2021: Motion for Voluntary Dismissal
“The Department of Education recognizes that I was defrauded by this school, but because of a ridiculous formula, I only get 10% relief. It’s insulting. I have worked hard to succeed despite all the harm that Everest caused to my life and career. I am not looking for a handout. I just want accountability and a process that is fair for everyone.”
- Sammia Pratt, lead plaintiff in Pratt v. Cardona
Coverage
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Education Department Announces Plan it Claims Will Help Scammed Students Discharge School Debt | ABA Journal
March 19, 2021
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A First Move on Borrower Defense | Inside Higher Ed
March 19, 2021
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Scammed borrowers sue Betsy DeVos, alleging she illegally limited student-loan cancellation | Marketwatch
June 9, 2020