Comments on Borrower Defense Call Out Betsy DeVos’ Lies

Comments on Borrower Defense Call Out Betsy DeVos’ Lies

Public comments from leaders across the country cite the Project’s revelation that the proposed borrower defense rule is based on fundamental lies

The public comment period for the Department of Education’s proposed new Borrower Defense rule came to a close this week, ending the thirty-day window in which the public had the opportunity to weigh in on the new proposed rules.

But what happens when the government proposes a rule that is based on fundamental lies and misleads the public? The comment period becomes meaningless. That is exactly what has happened this month with the Department of Education’s proposed changes to the Borrower Defense rule, and it is why dozens of elected leaders have called for it to be withdrawn, citing the Project on Predatory Student Lending’s initial comment.

As soon as the comment period opened, the Project submitted an initial comment showing that the Department was lying about how it has historically interpreted the Borrower Defense rule, and that this lie infects the Department’s estimates of how much the rule will cost. We attached the Department’s own documents proving our point. Following this revelation, others began speaking out and citing these inaccuracies as a reason that this disaster of a proposal should be rescinded immediately.

California Attorney General Xavier Becerra was one of the first to speak out. In his letter to the Department of Education, he cited the Project’s comment and said:

 “Secretary Betsy DeVos has proven yet again that she’s out of touch with the long-standing practice of allowing borrowers to submit claims when they suspect fraud. I urge the Department of Education to withdraw its proposed rule immediately. If the Department proceeds with this flawed, harmful and erroneously justified regulation, it should extend the comment period to a minimum of 60 days to allow for the submission of detailed comments from the public.”

Massachusetts Representative Joseph Kennedy III called on the Department to withdraw the rule, citing in his letter its egregious harm to students and the misinformation revealed by the Project.

“The proposed rule contains significant misrepresentations and incorporates those misrepresentations into its calculation of the cost of the rule, preventing the public from understanding and commenting on an accurate explanation. The Department erroneously asserts that it will return to the Department’s original practice of only accepting claims from borrowers facing coercive collection practices that it says “persisted for 20 years.” This is entirely inaccurate. Borrowers have been able to present claims outside of collections for the entire tenure of the rule proceeding prior to 2015. Stating that the Department only processed defensive claims prior to 2015 is not only false, it is misleading to the public. The Department’s own documents, as submitted by the Project on Predatory Student Lending, reflect the historical practice of the Department accepting claims outside of coercive collection proceedings. Because of these flaws, the proposed rule should be withdrawn and corrected immediately.”

Massachusetts Senator Elizabeth Warren called the proposed rule a “gross betrayal of the Department’s mission to serve students” in her letter to Betsy DeVos, which also cited the Project’s comment findings that the rule is based on fundamental lies.

“The Department’s willingness to mislead the public in this NPRM is appalling. And, the Department’s reliance on inaccurate information in order to restrict and virtually eliminate debt relief for defrauded borrowers is a gross betrayal of the Department’s mission to serve students.”

45 Senate Democrats, including Senator Warren, also submitted a letter highlighting these falsehoods, and the multitude of other reasons why this rule harms students and helps predatory for-profit schools.

“Not only is this proposal poor public policy, but it also breaks from previous practices adopted by both Democratic and Republican administrations. The Department has inaccurately asserted that “affirmative” claims were not permitted until the Obama Administration reinterpreted the 1995 borrower defense regulations. Yet, as the Legal Services Center of Harvard Law School makes clear, the Department accepted “affirmative” borrower defense claims well before 2015, including numerous cases between 1998 and 2003. The Department’s reliance on inaccurate information makes clear its motives are political, rather than the best interests of students.”

Massachusetts Attorney General Maura Healey joined AG Becerra and 18 other Attorneys General in submitting a comment, calling the rule “a license to cheat students and taxpayers.”

“The proposed regulations accordingly would be disastrous for students and taxpayers, and a windfall for the exclusive benefit of law-breaking schools. We urge the Department to rescind this misguided proposed rulemaking.”

House Committee on Education and Workforce Democrats submitted their own joint letter, expressing their strong opposition to the Department’s proposed rule.

“Throughout the NPRM, the Department wrongly declares that prior to the 2016 final borrower defense rule, the agency only accepted claims from borrowers who were in post-default collection proceedings (i.e., defensive claims). As seen in the evidence submitted by the Legal Services Center of Harvard Law School on August 2, 2018, the Department has been accepting claims from borrowers who were in good standing on their loans dating back to 1998. 2 This mischaracterization of history should be enough to consider withdrawing this proposed rule.”

Click here to learn more about the proposed Borrower Defense rule.

LSC Hiring a Veterans Intake & Pro Bono Coordinator (part-time)

The Legal Services Center of Harvard Law School (LSC) seeks to hire a part-time Veterans Intake & Pro Bono Coordinator to work in the Veterans Legal Clinic.  The Clinic—through which Harvard Law students receive hands-on lawyering opportunities—provides direct legal representation to low-income disabled veterans and their families. The Clinic maintains a diverse docket of cases, including appeals involving federal and state veterans benefits, discharge upgrade and correction of military records cases, and estate planning matters.  The Clinic practices before agencies, in state and federal court, and before Department of Defense tribunals.  Many of the Clinic’s cases raise cutting-edge issues involving the rights of disabled veterans.  The Veterans Intake & Pro Bono Coordinator will work closely with clients and Clinic attorneys and will have various responsibilities, including conducting initial client intake phone calls and meetings; screening cases for eligibility; gathering and organizing client documents; maintaining case files; liaising with pro bono attorneys, referral organizations, and other third parties; helping to manage the Clinic’s docket; maintaining the Clinic’s case management system; contributing to community outreach and engagement efforts; and providing administrative support in other respects to the Clinic’s mission. The position represents a unique opportunity to join Harvard Law School’s clinical program, to work in a dynamic public interest and clinical teaching law office, to serve the veterans community, and to develop administrative and advocacy skills. Salary is commensurate with experience.

Minimum Requirements: At least one year relevant experience and strong commitment to serving the veterans community.

Additional Qualifications:

  • Bachelor’s degree preferred, but not required
  • Strong preference for candidates who are veterans or otherwise have a personal connection to the military/veterans community
  • Demonstrated interest in working with the veterans community
  • Commitment to serving low-income communities and persons with disabilities
  • Excellent written, verbal, organizational and interpersonal skills; superior managerial skills; strong attention to detail; knowledge of Microsoft Office Suite and legal case management systems
  • Ability to thrive in a high-volume public interest litigation practice
  • Flexibility and the ability to handle multiple priorities
  • Ability to work well independently and as part of a team

To Apply:  Applications must be submitted via Harvard’s Human Resources website.  The posting and online application portal can be found here (Position ID# 46710BR).

2018 August — Veterans Legal Clinic — Harvard Law School — Intake and Pro Bono Coordinator Position

Resignation of Seth Frotman Reinforces The Trump Administration’s Failure To Protect Student Borrowers And Taxpayers

Today, Seth Frotman, the student loan ombudsman at the Consumer Financial Protection Bureau, announced his resignation in a letter stating that the bureau has “abandoned the very consumers it is tasked by Congress with protecting.”

The Consumer Financial Protection Bureau can play an important role in protecting student borrowers, having helped hold predatory schools like ITT and Corinthian Colleges accountable for their illegal business practices. Current CFPB leadership is thwarting any and all efforts to enforce student and consumer protection, and obstructing the work of those, like Seth, who would protect students. Seth’s resignation reflects this administration’s alignment with for-profit colleges and predatory corporations rather than the students and taxpayers it is supposed to protect.

The Project on Predatory Student Lending is the leading legal advocate for students cheated by for-profit colleges, representing hundreds of thousands of students in class action lawsuits, including ITT and Corinthian Colleges.

Several advocates and elected officials also voiced concerns about the the Bureau’s unwillingness to fulfill its obligation to students and taxpayers.

Estate Planning Project Hiring a Clinical Instructor

The Legal Services Center of Harvard Law School has an immediate opening for a Clinical Instructor. The position, which is available either as a full-time position or a part-time position, is within the Estate Planning Project of the Veterans Legal Clinic. The Estate Planning Project—through which Harvard Law students also receive hands-on training in lawyering skills—provides free legal representation to low-income disabled veterans on matters such as wills, powers of attorneys, healthcare proxies, living wills, trusts, special needs trusts, guardianships, conservatorships, and probate of estates. The goal of the Project’s representation is to help each veteran attain the maximum degree of control over financial, health, and family decision making. Many of the Project’s clients have multiple service-connected disabilities and/or face chronic or terminal illnesses.

The Clinical Instructor will oversee the Project’s docket, maintain community and pro bono partnerships, represent clients, and train and supervise law students who enroll in the Veterans Legal Clinic and who seek to develop skills in estate planning practice. The position represents a unique opportunity to work in a dynamic public interest law office within Harvard Law School’s clinical program.

Applications must be submitted via Harvard’s Human Resources website. The full posting and online application portal can be found here (Position ID# 46658BR).


Delay. Delay. Delay. The Department of Education Appeals Preliminary Injunction Order and Moves to Stay Litigation Pending Appeal: What it Means and What Happens Next?

On May 25, 2018, a federal court in San Francisco granted former Corinthian borrowers’ motion for a preliminary injunction in Calvillo Manriquez v. DeVosordering the Department of Education to stop using its “average rulings rule” immediately, and to stop collecting the loans of certain Corinthian borrowers. The judge found that the Department of Education had violated federal law by secretly and illegally using data from the Social Security Administration to partially deny individual borrower defense applications for thousands of Corinthian borrowers. On June 19, 2018, the Court clarified that that the order stops all collection efforts on all Direct Loans that are infected with Corinthian’s fraud. The Order will last until the Department proposes, and the Court approves, a new policy for loan relief.

On July 24, 2018, the Department informed the Court that it was appealing this decision to a higher court for review: the Ninth Circuit Court of Appeals. Two days later, the Department filed a motion requesting a “stay pending appeal.” In other words, they’re asking that the Judge hold off on any further litigation until the Circuit Court reviews the preliminary injunction order. We’ve opposed that request and are awaiting a decision from the Judge.

The Department’s decision to appeal and its attempts to delay this case harms the very borrowers it should be protecting. The Department’s violation of the law is clear and its only strategy is to try to delay this case. We hope that the Department will eventually come to its senses and cancel all Corinthian borrowers’ debt. Until then, we will highlight the Department’s unlawful conduct on appeal and attempt to move the litigation forward.

What is this case about?

Calvillo Manriquez v. DeVos is a class action filed in December 2017 challenging the Department of Education’s unexplained, irrational, and abrupt change of course with respected to former students of collapsed for-profit Corinthian Colleges. Under the Department of Education’s watch, Corinthian took in billions in taxpayer money and used boiler-room-style high-pressure tactics and racially-targeted advertising to build its business, all while producing outcomes for students so terrible that it had to lie about them. Corinthian filed bankruptcy and its debts disappeared, but the students it cheated were left thousands of dollars in debt for an education they never received.

After previously acknowledging that Corinthian’s widespread wrongdoing entitled at least some former students to complete cancellation of their federal student loans, the Department stopped granting any cancellation at all, and then used data from the Social Security Administration and announced that it would cancel only a portion of these bogus debts.

Who are the plaintiffs in this case?

 The proposed class in this case is Corinthian borrowers who are covered by Department of Education findings that Corinthian violated the law by lying to them about the chain’s job placement rates. As the Department already decided, because the company lied to get them to enroll, their loans are invalid and unenforceable. There are several named plaintiffs representing the class. Read about them here. You can also find out if you are a member of the class by clicking here.

What is an appeal?

The federal court system is made up of several different layers: trial courts that initially hear a case, a regional appellate court that reviews the trial court’s decision, and the U.S. Supreme Court. The preliminary injunction order in this case was issued by a trial court. The Department of Education has asked that the regional court of appeals that covers California (the Ninth Circuit Court of Appeals) review the trial court’s order on the preliminary injunction. A three-judge panel will review the decision on appeal and could take anywhere from 6-months to a year to do so. Once they issue their decision (either agreeing or disagreeing with the trial court Judge), the case will return to the trial court for further proceedings.

What is a stay of litigation pending appeal and does it impact the preliminary injunction?

A stay of litigation pending appeal stops the litigation from moving forward while the appeal is ongoing. A stay of litigation pending appeal will not impact the preliminary injunction order. Here, the Department has asked the Court to halt all further litigation until the appellate court weighs in, but it is still required to comply with the preliminary injunction order during the appeal.

What happens next?

At the trial court level, we’re going to fight to try to keep the case moving forward so that we can quickly resolve the case after the appeal is resolved. If we succeed, the court will decide whether Plaintiffs can pursue the matter as a class action and whether the Department has to turn over certain documents. If we don’t succeed, the litigation will be on hold pending the higher court’s decision on the preliminary injunction.

Regardless of what happens at the trial court, the appeal will move forward. On appeal, the Department will file its initial brief in early September, we’ll respond in early October, and the government will file a reply brief three weeks later. The Court will then set a hearing date and will issue a written opinion at any point after the oral argument.