How Courts Have Responded to Student Loan Borrowers in Historic Ways This Month | Blog

Courts have responded to student loan borrowers in historic ways this month. Here are the latest updates on our work.  

“Disturbingly Kafkaesque” Borrower Defense Process

Just this week, a judge slammed Betsy DeVos' handling of students' borrower defense claims – rejecting a proposed settlement in our case Sweet v. DeVos after the Department of Education issued thousands of “alarmingly curt” and “potentially unlawful” form denials to 94% of borrower defense applicants. The judge raised the possibility of an injunction against further denials, and took the unusual step of allowing the students to take depositions of Department of Education officials.In the ruling, the judge found the Secretary’s process to be “disturbingly Kafkaesque.” He was struck by the scope of the issue and the class members’ “shared trauma”:

“The consistency and passion with which the nearly one hundred thirty written commenters, three hundred speaking requests, and the fourteen speakers at the fairness hearing have told their stories leads to the conclusion that their voices are not individual, special cases within the class, but representative of the class’s shared trauma. This is not an attorney-driven case. Class members have a genuine interest; they sought opportunity via higher education only to be deceived by for-profit institutions and, at least in some cases, saddled with crushing debt.”

This decision comes on the heels of a fairness hearing where over a dozen borrowers testified about their experiences, describing the harm the Department of Education caused by issuing blanket denials without considering their claims. Five hundred class members and members of the public listened to the Zoom proceeding, which the judge called the most interesting in his twenty-one years on the bench.You can read more about the ruling in the Washington Post, the Associated Press, and Politico. 

Seeking to Hold Secretary DeVos in Contempt… Again

It has not been a great week for Education Secretary Betsy DeVos. In addition to the scathing ruling in Sweet, borrowers in Massachusetts filed a motion to hold the Secretary in contempt of court for refusing to comply with an order to decide the Massachusetts Attorney General’s borrower defense application for the 7,200 former Corinthian Colleges students in Massachusetts. This comes four months after a federal judge ordered the Department to decide, and grant, the AG’s borrower defense application, and to discharge all of the borrowers’ loans, a big victory in our lawsuit Vara v. DeVos,As you might recall, this would not be Secretary DeVos’ first time being found in contempt. Last year, a federal court held her in contempt for illegally collecting on the loans of thousands of former Corinthian College students in our case Calvillo Manriquez v. DeVos. 

Tackling Bogus Private Loans  

In our newest case, Villalba v. Navient, we’re taking on a private lender. Last month, we filed a lawsuit against Navient on behalf of Jorge Villalba, a former ITT student, and his mother, Alicia Villalba, who had co-signed his private loans. Jorge is the lead named plaintiff in our ITT bankruptcy case. In 2017, Jorge was one of the few ITT students who had his federal loans cancelled based on his borrower defense. However, when Jorge asked Navient to cancel his $43,000 in private loans – after the government had deemed his ITT loans invalid due to the school’s fraud – Navient refused and misled the Villalbas about their right to private debt cancellation.This case highlights the situation of many former for-profit college students who continue to struggle with insurmountable private loan debt and no clear path to relief. The private student loan industry has benefited from for-profit college scams for decades.See coverage of the case from MarketWatch. 

Harvard Magazine: Attacking the Concept of Debt

In September, Harvard Magazine featured us in an in-depth piece that tells the history of the Project and includes perspectives from team members, partners, former clinical students, and clients.Check out “Attacking the Concept of Debt.” 

Free “Fail State” Screening & Panel, Oct. 26-28

We’re excited to work with the Fail State team and fellow advocates on a virtual screening of “Fail State”: an award-winning film that exposes the for-profit college industry and its harm to student borrowers. After the screening, there will be a panel discussion that features our own Toby Merrill.Please join us! It’s available for 48 hours and to a limited number of people. Register here.