Lawsuit calls for Education Department to end partial student debt relief

By Daniel Uria  |  March 20, 2018 at 12:09 AM
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March 19 (UPI) -- A legal services clinic called on a federal judge to block the U.S. Education Department from using Social Security data to deny loan discharges to defrauded students.

Harvard University's Project on Predatory Student Lending filed motion for an injunction in federal court in California to block a plan by Education Secretary Betsy DeVos and the Department of Education to partially deny student loan relief from students defrauded by Corinthian Colleges, Inc. by comparing the average earnings of students in similar vocational programs.

The students' earning information was gathered through "gainful employment" metrics provided by the Social Security Administration.

Project on Predatory Lending attorney Joshua Rovenger argued the students are legally entitled to full relief of their loans and the Department of Education has no right to use the data for any purpose other than evaluating vocational programs

"The Department of Education had already unfairly and unlawfully refused to cancel these bogus loans for so long," Rovenger said. "Now, it has secretly and illegally coopted Social Security data to try to argue for something less than the complete cancellation and refund that these borrowers are due. We are seeking to rescind these illegal partial denial notices that never should have been issued in the first place."

The Department of Education announced the new guidelines in December, offering students earning 49 percent or less of what their peers earn 100 percent relief on their loans.

Students at or above that threshold would be offered relief on a sliding scale, meaning students making 90 percent or more, would receive 10 percent relief.

At the time the Department of Education said it approved for discharge 12,900 pending claims submitted by former Corinthian students, while 8,600 pending claims had been denied.

"This 'average earnings rule' is not only a theft of data, but more importantly, it is a fact-free attempt by the Department of Education to double cross borrowers who were scammed by Corinthian and then waited months or even years for the relief that the Department promised them," said Noah Zinner, an attorney at Housing and Economic Rights Advocates.

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