SACRAMENTO – California Attorney General Xavier Becerra and Massachusetts Attorney General Maura Healey, leading a coalition of 21 attorneys general, today called on the U.S. Department of Education to immediately discharge the student loans of eligible borrowers who attended schools that closed down while they were enrolled mid-program. Many of those schools were predatory, for-profit colleges. In the letter, the coalition urges Education Secretary Betsy DeVos to fulfill her obligation under federal law to provide immediate and automatic loan relief to borrowers who attended a school when it closed on or after November 1, 2013, and who did not subsequently re-enroll in an eligible program within three years from the date the school closed. It is estimated that under federal law, tens of thousands of students nationwide who attended any of the 1,400 schools that closed in 2014 and 2015 are eligible for approximately $400 million in automatic debt relief.
“It’s time for Secretary DeVos to stop dragging her feet and immediately provide relief to the tens of thousands of student loan borrowers eligible for closed-school discharge,” said Attorney General Becerra. “These students, who were pursuing their right to an education, were instead cheated by predatory for-profit schools or had their school close mid-program, and have received virtually zero support from the Department of Education under DeVos’s leadership. These students have waited long enough. The Department of Education needs to get its act together, do its job, and begin supporting the students it swore to protect.”
Students may be eligible for automatic closed-school debt relief if they did not complete the program of study at a school either because the school closed while they were enrolled, or because they withdrew not more than 120 days before the school closed. For example, when the predatory, for-profit Corinthian Colleges (Corinthian) shut down in April 2015, it left approximately 16,000 students displaced. Many of these students are now immediately and automatically eligible to have their federal students loans forgiven and to receive a refund of all repayments amounts, provided they did not enroll in a title IV-eligible program within three years from the date the school closed.
Separate from school closures, students defrauded or cheated by their school may also be eligible for loan relief based on a federal program known as “defense to repayment.” This program gives victimized students the opportunity to have their federal student loans forgiven. When students submit a borrower-defense claim, they can request to have their loans placed in forbearance and to halt collection attempts, even on defaulted loans.
Attorney General Becerra has been a leader in protecting our students and holding the Department of Education and Secretary DeVos accountable. Not only has he challenged the Department for unlawfully delaying its 2016 borrower defense regulations, he has also sued the Department for delaying implementation of its gainful employment rules—rules that help weed out vocational programs that do not adequately prepare their students for jobs. In 2017, Attorney General Becerra urged Secretary DeVos to expedite loan forgiveness for students defrauded by Corinthian and then sued over her failure to process these applications. Attorney General Becerra’s lawsuit is related to a subsequently filed suit brought by former Corinthian students represented by Housing and Economic Rights Advocates and the Harvard Law School Legal Services Center. Earlier this month, Attorney General Becerra filed an amicus brief in support of these students in the Calvillo Manriquez v. DeVos suit, who successfully challenged this partial relief policy, in which a San Francisco federal court halted the Department from carrying out its illegal attempt to shortchange defrauded Corinthian students.
In 2017, Attorney General Becerra sued Ashford University, another for-profit school, and its parent company Bridgepoint Education for unlawful activity against its students; that lawsuit is pending. Attorney General Becerra has also announced a settlement with Aequitas Capital Management that provided more than $51 million in debt relief for Californians who attended schools owned by Corinthian, and a settlement with Balboa Student Loan Trust providing another $67 million in debt relief for these students.
The Attorney General’s Office remains committed to advocating for former Corinthian students and defending all defrauded student borrowers. For more information on eligibility for student loan relief and the legal rights of former Corinthian students, please click here.
A copy of the letter can be viewed here.