Students Forced to Turn to the Courts for Loan Relief
Two college women who attended Sanford-Brown Institute, Tina Carr and Yvette Colon, have sued the Education Department and a private load servicer alleging they were defrauded by a for-profit college. Their attorneys are hoping the case will bring to light a new legal remedy for all students frustrated by the Department’s lack of action with regard to claims seeking loan forgiveness.
The lawsuit was filed on Sunday in federal court in New York. The women attended a for-profit college and are seeking to have their student loans eliminated. Colon completed a certification program to work as a cardiac sonographer, only to learn that her credentials were invalid and non-transferrable to other schools. Colon is asking for the cancellation of her four federal and two private loans, a total of $21,000. Carr wanted to be a medical assistant, but she claims Sanford-Brown lied to her about offering job placement assistance and credit transferability. Carr has defaulted on her $14,500 federal loans.
The case cites state and federal laws that prohibit fraud. Attorneys for the two students say the new approach is necessary because Education Secretary Betsy DeVos has stalled consideration of tens of thousands of similar claims from borrowers.
“People’s rights not to pay for defective products is well established in law, so whatever the Department of Education is or is not doing, the legal rights of borrowers continue to exist and are enforceable against the government just as they are against private parties,” said Toby Merill, a litigator at Harvard University’s Project on Predatory Student Lending, which is representing the two students. “Yvette and Tina deserve to be able to move on with their lives, and because it’s clear that the department doesn’t have any intention for doing anything for cheated students, it’s necessary to bypass them and go straight to the court for their fair hearing.”
Abby Shafroth, an attorney at the National Consumer Law Center, said borrowers are turning to the courts as a last-ditch effort to have their concerns considered. “They’ve come to this approach because all other avenues have failed,” Shafroth said. “At a certain point there has to be another way, the department cannot say, ‘You have to use our process and not provide a process.”
“As mandated by federal requirements, all applications for defense to repayment are submitted to the U.S. Department of Education for processing, and, upon government direction, servicers suspend repayment while the Department of Education makes a discharge eligibility determination,” Navient, the loan servicer named in the lawsuit, responded.
In 2013, the school reached a $10 million settlement after an investigation by New York Attorney General found that Sanford-Brown routinely misrepresented its job placement results to students. Since then, the school only offers courses online.
There is currently a backlog of some 87,000 loan cancellation claims, according to a report published this week regarding the status of requests made to the Education Department. In the meantime, DeVos has hired Robert Eitel, who served as a top lawyer for Career Education Corporation, an umbrella organization for SBI, as her senior counselor. She also appointed a former dean at DeVry University to serve as head of the department’s enforcement unit. DeVos says she is intent on protecting students’ rights, but says the Obama regulations were too lax and is working to change these.
“They made a bunch of promises and they delivered nothing, I have nothing to show for it,” says Carr. “We need relief from this, I am stuck in limbo.”