Judge Certifies Class of For-Profit College Students in Suit Over Delayed Loan Forgiveness
Secretary of Education Betsy DeVos and the U.S. Department of Education face a certified class of former for-profit college students who claim delays in processing their 210,000-plus loan forgiveness applications have damaged their credit.
October 31, 2019 at 06:39 PM
3 minute read
A federal judge has certified a class of former for-profit college students who allege that Secretary of Education Betsy DeVos and the U.S. Department of Education have damaged their credit and access to financial aid by failing to act on more than 210,000 students' loan forgiveness applications.
The past for-profit college enrollees are seeking to cancel their student loans under the "borrower defense" given the misleading business practices of schools such as Corinthian Colleges and ITT, which shuttered in the wake of federal sanctions a few years ago.
"According to plaintiffs, the Department 'has a legal duty to reach a final decision on each borrower defense assertion' and it is undisputed that—despite the swelling backlog—'it has refused to satisfy that duty for well over a year,'" wrote U.S. District Judge William Alsup of the Northern District of California in an order granting class certification Wednesday.
Alsup appointed attorneys from the Harvard Legal Service Center's Project on Predatory Student Lending and the House Economic Rights Advocates to lead the case as class counsel.
The case spins on the question of whether the Department of Education has violated the Administrative Procedure Act with its "blanket refusal" to adjudicate the applications.
DeVos and the department, who are represented by Kathryn Celia Davis and R. Charlie Merritt of the Justice Department's Civil Division, asserted that the class failed to establish commonality, because plaintiffs claims were "factually diverse" and they did not point to an overarching policy causing the applications to pile up, according to the ruling.
The class certification comes one week after Magistrate Judge Sallie Kim of the Northern District of California fined the department $100,000 for continuing to collect loans from Corinthian College students, despite a preliminary injunction ordering it to stop issued in Manriquez v. DeVos, a class action with similar allegations.
Alsup wrote that the Department has not decided on a single application since June 2018, which is "especially striking" since it granted about 27,996 borrower defenses between July 2016 and January 2017. This fact, he wrote, supports the presence of an alleged uniform policy.
"Even if this gaping contrast might possibly be explained in part by the preliminary injunction in Manriquez, it nonetheless evidences the uniform policy of inaction alleged here where the proposed class explicitly excludes Corinthian borrowers who are members of the Manriquez class," Alsup wrote.
In their defense, DeVos and the Department appear to be faulting plaintiffs for not fully proving their claim at this early stage, which does not require evidentiary showing, the judge wrote.
"In other words, though plaintiffs must show a common method of proof, they need not actually prove their case at this stage," he ruled. "Here, plaintiffs' evidentiary showing points to more than an amorphous, undefined systemic conduct. This is sufficient at this stage."
Class counsel and the DOJ lawyers did not respond to a request for comment at the time of publication.
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