More Than 1 in 4 Pending Debt Relief Applications Are From California Students
SACRAMENTO – California Attorney General Xavier Becerra today filed a lawsuit against the U.S. Department of Education and its Secretary, Betsy DeVos, for refusing to process debt relief claims submitted by tens of thousands of students who took out federal student loans to attend Corinthian Colleges, Inc. (Corinthian). Students became eligible to apply for this relief after the courts found that Corinthian defrauded these students in violation of California consumer protection laws. More than 1 in 4 of those students with pending debt relief claims resided in California.
“What Secretary DeVos is doing is unconscionable,” said Attorney General Becerra. “After having their American Dreams stolen by a so-called higher education institution, Corinthian students are now being denied critical relief by a Secretary of Education hostile to their plight. It is hard to believe that we are forced to sue the Department of Education to compel Secretary DeVos to carry out the Department's legal duty and help these students rebuild their lives. We will work to ensure that all who seek a college degree can do so without worrying about unscrupulous for-profit purveyors of a sham college education.”
The federal Higher Education Act entitles student loan borrowers to relief if they are defrauded by their schools. More than 50,000 such claims submitted by Corinthian students are pending before the Department of Education, 13,000 from Californians. The Department of Education promised many of these borrowers “expedited” student loan discharges. Prior to Secretary DeVos’s appointment, the Department had granted this critical relief to 28,000 student victims who were no different than those with pending claims. However, since the change in administration on January 20, 2017, the Department of Education has completely and inexplicably halted processing these claims. Today’s lawsuit follows repeated calls by state attorneys general from California and several other states, Members of Congress, and student advocates urging the Department to do its job and provide federal loan relief to defrauded Corinthian students.
In 2013, the California Attorney General’s Office led the charge against for-profit Corinthian Colleges and its subsidiaries, seeking to put an end to abusive practices that left students under a mountain of debt and far too often without the jobs Corinthian had falsely promised its degrees would provide. Corinthian specifically targeted low-income, vulnerable students through false advertisements that misrepresented job placement rates and the value of its educational programs. Corinthian illegally used the seals of the armed forces in its advertisements to recruit veterans. It also engaged in illegal debt collection practices. The California Attorney General's Office ultimately obtained a $1.1 billion judgment against Corinthian for its misconduct.
The California Attorney General's Office was instrumental in moving the Department of Education to implement a borrower-defense process to grant widespread, expedited loan relief to defrauded Corinthian borrowers. Based on a joint investigation with the California Department of Justice, the Department of Education under President Obama announced that tens of thousands of former Corinthian students were entitled to federal student loan relief. The Department announced a streamlined process by which former Corinthian students could apply for that relief. Former Corinthian students can log on to https://oag.ca.gov/corinthian to find out if they are eligible to use this streamlined process.
When he assumed office, Attorney General Becerra made protecting for-profit college students a top priority. Since then, he has sued the online for-profit Ashford University and its parent company Bridgepoint Education for false advertising and illegal debt collection, announced a settlement that will provide $51 million in private student loan debt relief to Californians who attended Corinthian schools, and also twice sued the Department of Education and Secretary DeVos for unlawfully delaying key federal regulations – the Gainful Employment Rule and Borrower Defense Regulations – that would help protect students and taxpayers from misconduct by predatory for-profit schools.
Attorney General Becerra’s complaint was filed in parallel with a separate lawsuit by the Attorneys General of Massachusetts, Illinois, and New York. A copy of the complaint filed is attached to the electronic version of this release at oag.ca.gov/news.