Year in Review: 2021 Brings Big Wins and New Battles for Defrauded Borrowers | Blog
2021 ushered in a new Presidential administration and promises of long-awaited justice for defrauded borrowers. We are thrilled to share our clients’ hard-fought victories of loan cancellation, yet the fight is not over for tens of thousands of clients still waiting. Their voices are more powerful than ever. At every opportunity, our clients have continued to show up to raise awareness and to hold the Department accountable to their rights under the law. One thing was made consistently clear throughout the year: borrowers will not stop fighting for the relief and justice they and others are owed. And we’re right there with them.
Student borrowers secure long-awaited victories
7,200 former Corinthian Colleges students in Massachusetts scored a major win as the Department of Education dropped its appeal in our lawsuit Vara v. Cardona (formerly Vara v. DeVos) and will comply with the June 2020 federal court order to cancel these loans. This is the first time a federal court has ordered a borrower defense discharge of federal student loans and sends a clear message about borrowers’ rights to loan cancellation under the law.
Read more in the Washington Post: Biden administration drops appeal of legal decision granting former Corinthian Colleges students debt relief
Student borrowers in the class action lawsuit Pratt v. Cardona(previously Pratt v. DeVos) moved to voluntarily dismiss the lawsuit this fall after the Department of Education agreed in March 2021 to end the previous administration’s unlawful partial relief policy and provide loan cancellation to impacted borrowers. According to the Department, the new decisions will result in an additional $140 million in debt cancellation for approximately 13,000 borrowers, on top of approximately $40 million in debt discharged under the former partial relief methodology — a big win for borrowers who stood up to stop this policy.
In March, the Department of Education announced that it would approve the borrower defense applications of a select 18,000 who attended ITT Technical Institute and grant them 100% loan discharges, resulting in approximately $500 million in relief. While a promising sign from the Department, this cancellation only accounts for 2% of the over 750,000 former ITT students nationwide. There are hundreds of thousands of ITT borrowers who are equally owed loan cancellation, and are still waiting for action.
The fight continues in Sweet v. Cardona (formerly Sweet v. DeVos). An amended complaint earlier this year brought forth new evidence that illustrates the sham borrower defense process engineered to deny defrauded borrowers debt relief, regardless of the merits of their claims. Our clients pushed for accountability and the court agreed, issuing a subpoena of Betsy DeVos and demanding that she testify to her knowledge around the borrower defense process. However, the Biden administration is currently fighting the subpoena along with DeVos’ legal team; the issue is currently pending before the Ninth Circuit Court of Appeals.
Read about the sham borrower defense process in the New York Times: A DeVos System Allowed 12 Minutes to Decide Student Loan Forgiveness
Borrowers take action and demand accountability
Despite the Department of Education refusing to include them in the official rulemaking committee, defrauded for-profit college students around the country made sure their voices were heard in this year's Negotiated Rulemaking sessions. Over the course of three sessions, student borrowers took to the public comment periods to give passionate testimonies about their for-profit college experiences and the impact current borrower defense policies have had on their lives, and the urgent need for reform.
We rallied with our clients and fellow advocates to declare September “Borrower Defense Action Month," encouraging those who attended a predatory for-profit college to file a borrower defense application to get their federal student loans cancelled. There are many former students of predatory for-profit colleges who may be eligible and need to take action to get their federal loans cancelled.
Watch our short video, Faces of Defrauded Students, for the call to action.
New milestones for the Project
This year the Project on Predatory Student Lending celebrated five years of fighting against the for-profit college industry. Over the last five years, the Project’s impact has changed the lives of more than one million borrowers and its litigation has directly resulted in the cancellation of over $2.5 billion in fraudulent student debts. We celebrated our accomplishments and doubled down on our commitment to justice for our clients.
The team welcomed Eileen Connor as the Project’s Director this summer, bidding a fond farewell to Toby Merrill. Five years ago, Toby Merrill and Eileen Connor launched a first-of-its-kind legal fight against predatory for-profit colleges, with Connor leading the Project’s litigation as Legal Director.
We’re grateful to and inspired by our clients and partners who continue to fight against this predatory industry and the policies that enable it — and we look forward to continuing the fight alongside you in 2022.