Injunction Against Department of Education: 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. The court also recognized the extraordinary harm that Corinthian borrowers are suffering at the hands of the government.

This preliminary injunction is a landmark decision, and it represents significant progress in the long fight to force the Department to recognize that it cannot continue to collect on predatory and fraudulent student loan debts. It also recognizes the extraordinarily lawlessness of the Department of Education, and finds that the Corinthian borrowers are likely to ultimately win their case that the Department of Education violated their rights in partially denying their claims. Read the decision here (pdf). Read coverage of this case and this ruling here.

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.

What is the average earnings rule?

In March, years after deciding that these Corinthian borrowers deserve complete loan cancellation, the Department started partially denying loan cancellation to former students because their “average earnings” were not less than half of the “average earnings” of some unspecified group of students who went to a different, non-Corinthian school. In coming up with its murky and convoluted calculation, the Department secretly and illegally gathered information about borrowers’ earnings from the Social Security Administration (SSA). Perversely, the Department got this information from SSA by using an information sharing agreement intended to protect the public from predatory companies like Corinthian by measuring and publishing “gainful employment” metrics.

To compare the earnings from Corinthian programs to “comparable” programs that had passing gainful employment scores, the Department grouped 61,717 former students who applied to have their loans cancelled by 79 Corinthian programs they attended. The Department submitted identifying information (names, dates of birth, Social Security Numbers) from their loan cancellation applications to the Social Security Administration to obtain the data regarding the earnings of those students. In return, the Social Security Administration provided the Department with the “mean and median incomes” for each program group, based on data from 2014. The Department compared these mean and median incomes to unidentified “comparable” programs that had passing gainful employment scores.

Borrowers in programs for which the average Corinthian applicants’ earnings were more than half of the “comparable” programs were denied complete loan relief. Between 10% and 50% of their loans were cancelled. Because their applications for loan cancellation were partially denied, the Department told them, they must now start repaying their bogus loans.

What is the Privacy Act?

The Privacy Act is a federal law from 1974 intended to protect people when the government collects and uses their information. It prohibits one government agency from sharing individuals’ information with other federal agencies without meeting procedural safeguards that the Department of Education undisputedly ignored. Moreover, federal agencies may not use data matching programs of the type the Department of Education undertook to make decisions concerning the “rights, benefits or privileges of specific individuals.” Here, the information the Department of Education disclosed to the Social Security Administration was used to make a determination about a specific individual – how much of the borrower’s loan the Department would forgive.

How does the Department’s average earnings rule violate the Privacy Act?

The court found that the Department had clearly violated the Privacy Act by gathering applicants’ information from the Social Security Administration and using it to partially deny Corinthian borrowers’ requests for loan discharge. The decision is a significant blow to the Department’s attempts to backtrack on the complete loan cancellation due to Corinthian borrowers.

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.

What is a preliminary injunction?

A preliminary injunction is a tool to stop an illegal action or condition while the lawsuit is litigated, instead of waiting for the end of the lawsuit to get relief. The plaintiffs had to show that they are likely to succeed on the merits of their claim, that they would suffer irreparable harm if the court did not stop the Department, and that an injunction is in the public interest.

The court rejected the Department’s arguments that the plaintiffs were not suffering from the Department’s actions, finding them “meaningless given the dire financial circumstances that Plaintiffs describe. Given their financial situations, any additional dollar they are required to repay takes away from basic need for food and shelter.”

The court also rejected the Department’s arguments that “the relief Plaintiffs seek will divert resources from other educational programs, and that there is a strong public interest in saving funds.” To the contrary, “there is a strong public interest in ensuring that agencies comply with the law in enacting rules and regulations. ” Moreover, in a clear rebuke, the court responded to the Department, “Saving money does not justify a violation of the law.”

What is enjoined, and what happens next?

The court ordered the Department of Education to stop all use of the Average Earnings Rule immediately. The court also ordered immediate cessation of all attempts to collect Plaintiffs’ debt.

The court is considering whether to order the Department to award full and complete loan cancellation to Corinthian students. To that end, the Court is considering whether to order the Department to reveal certain internal documents. A hearing on these issues, and further injunctive relief, is set for June 4th at 2:30pm in San Francisco.

Students Help Challenge the Exorbitant Cost of Calling from Jail

When does a simple 10 minute phone call from one spot in Massachusetts to another cost nearly $5?

When you are in the county lock-up in Bristol County in the southeast corner of the state.

These exorbitant fees can mount quickly and are a huge burden for the families of people awaiting trial or serving sentences. They are now also the focus of a class action lawsuit that has given a pair of Harvard Law School students the opportunity to help frame both the legal and media strategies for prosecuting a high profile case to upend a lucrative prison telephone company contract that exploits inmates while enriching one county sheriff’s coffers.

Kelly Ganon,’19, Dylan Herts ’19 and Roger Bertling, Harvard Lecturer on Law.

The case was filed in May against Bristol County (Massachusetts) Sheriff Thomas M. Hodgson and Securus Technologies, Inc., a Texas-based company that provides phone services for inmates across the country.  Brought by four named plaintiffs – two of them inmates—the case alleges that the sheriff’s office’s contract with Securus represents an illegal kickback scheme that nearly doubles the cost of calls made from the county jail.

Organizations filing the litigation on behalf of the plaintiffs were the Consumer Protection Clinic at the Legal Services Center of Harvard Law School, the National Consumer Law Center, Prisoners’ Legal Services, and Bailey & Glasser LLP. The lawsuit seeks an injunction to halt the unlawful payment scheme and monetary relief to return the money illegally extracted from class members.

Talk to loved ones or pay medical bills?

The Securus contract forced the 95-year-old mother of one inmate to choose between paying her medical bills or talking to her son.  The teenage daughter of another inmate had to rush through conversations updating her father on her latest accomplishments in school and in her social life because the calls were becoming too expensive. Another plaintiff says the calls from her jailed fiancé – who committed suicide while incarcerated – placed a significant strain on her family’s finances.

“We are representing a group of people who are caught between a rock and a hard place,” says Kelly Ganon, ‘19, who was a paralegal in the Economic Crimes Unit at the U.S. Attorney’s Office in Boston before coming to law school, and worked in the Massachusetts Attorney General’s Office the summer after her first year in law school.

Which legal arguments to use

“It was fascinating to work with seasoned attorneys to strategize about how to put the best foot forward on a case,” Ganon adds.  Ganon and fellow student Dylan Herts ‘19 researched a range of legal arguments that they or the attorneys posited could be used. “I’d never been involved in a civil case from the beginning, looking critically at all the various ways the case can be taken, the legal arguments that can be made, and making decisions about what will stand up best.”

Herts, who prior to coming to HLS worked as an economic litigation consultant providing expert witnesses to firms defending clients in securities and antitrust litigation, observes: “This was my first experience coming from the plaintiff side.  It was amazing to have the whole universe available to consider in terms of how to frame the litigation. What can we bring up? What should we bring up?”

The ability to take Securus to court only arose when the company moved over the past few years to be viewed as an internet service provider rather than a phone utility. “As a traditional phone utility, it could not be sued on these claims, but as an internet company providing phone calls over the internet it could be,” says Roger Bertling, who leads the Consumer Protection Clinic at LSC and is the lead attorney from Harvard on the case.

Fees and kickbacks

Massachusetts’ law prohibits sheriffs from charging prisoners unauthorized fees for services such as phone calls. Rather than attempt to assess these fees directly, the Bristol County Sheriff’s Office receives fees by arranging for Securus, a private vendor, to extract revenues from prisoner phone calls on its behalf, the lawsuit states.  Those revenues are then redirected to the sheriff’s office through illegal financial kickbacks, Bertling explains.

Between August 2011 and June 2013, Securus paid the Bristol County Sheriff’s office $1.7 million in exchange for an exclusive contract to provide inmate phone services.  It paid the sheriff’s office $200,00 per year plus a lump sum of $820,000 to cover 2016 to 2020.  To offset these costs, Securus charged inmates, their families and friends exorbitant fees for phone calls.  Inmates had no choice but to use Securus.

Fees for calls in Bristol include $3.16 for the first minute and 16 cents for each additional minute.  If calls are disconnected – a common complaint from inmates – reconnecting results in a recurrence of the $3.16 charge for the first minute.  A simple 10 minute phone call can cost $4.76.

Statewide and nationwide impact

If the case is ultimately successful, it could have an impact on an estimated 1.2 million inmates across Massachusetts, the US and Canada who can only use the services of Securus to make phone calls to their loved ones from jail or prison.  Securus provides phone and video calling services for jails in 10 of the 14 counties in Massachusetts, as well as for the state’s prisons. Contract terms vary widely among jurisdictions. In the Massachusetts state prisons, for example, phone calls are 10 cents per minute with no special fee for the first minute.

Impact litigation and media

“When you are doing impact litigation like this case, the lawyers are doing a lot that is not litigation,” notes Herts, who says he is hoping to do consumer protection antitrust work with the government in the future. “Media outreach was an extremely important facet of this case.  When the litigation was filed, I saw an article about it online in the Boston Globe.  Then a few days later the Globe also did an editorial” he says.

The editorial sided with the arguments being made in the lawsuit and against the practices of Securus and the Bristol Country Sheriff’s department. It also called for legislative reforms that would prevent similar price-gouging practices.

“An immense amount of discussion among the groups working on this suit were focused on how are we going to tell this story,” Ganon says. “We focused a lot of time on the narrative that sets the stage for the legal arguments in the filing.”

“The first two pages needed to be very focused,” Herts notes.  “When you read the facts in the newspaper, people just know what is going on is not OK.  The ways in which this activity is morally offensive is obvious.  But the legal arguments are more subtle.”

Consumer protection offers great experience

As students in the Consumer Protection clinic course, Ganon and Herts began their semesters helping individual consumers facing credit card debt cases in state district court, which was equally rewarding.

“At the beginning of the semester, my professor (Bertling) asked each student what they wanted to do after graduation and I told him I wanted to be a trial attorney,” Ganon says.  She was given the opportunity to represent clients in state district court and work on a case requesting a stay for a client who was battling nine lawsuits related to student loan debt.

Herts, who also had the opportunity to represent clients in state district court as well as working on the prison phone call case, says he hopes to stay involved with the case next semester by either taking an advanced level course with the Consumer Protection Clinic, or through another route.  “The experience is teaching me a lot – and the issue is really important.”

— Julie Rafferty

Photo credit: Martha Stewart

Job Announcement: Project Manager, Veterans Legal Clinic

The Veterans Legal Clinic at the Legal Services Center of Harvard Law School has an opening for a part-time Project Manager to help lead an innovative partnership that uses technology to improve access to benefits for Massachusetts low-income veterans and their families.  This is a great opportunity to work on behalf of the veterans community and to do cutting-edge work at the intersection of technology, law, and community engagement.  For more information and to apply to the position, click here.

Project on Predatory Student Lending Hiring a Racial Justice Fellow

The Project on Predatory Student Lending is excited to announce a one-year fellowship! The racial justice fellow will develop cutting-edge litigation to combat the discriminatory efforts of current higher education policies, and lead outreach efforts by engaging with existing clients and community partners and forging new partnerships with communities impacted by the predatory for-profit industry.

For more information and to apply to the position, click here.

For more information on for-profit colleges and racial justice, click here.

LSC, OUTVETS, & Veterans Legal Services Co-Host LGBTQ Veterans Summit

A two-day summit at Harvard Law School in Cambridge, MA on the unique issues faced by LGBTQ veterans brought together dozens of experts on LGBTQ military and veterans matters from the US and Canada. The group of legal, political, and healthcare experts examined both past and present discriminatory policies — including Don’t Ask, Don’t Tell — and the proposed U.S. transgender service ban, currently on hold in the courts.

Titled “Do Ask, Do Tell, Do Justice: Pursuing Justice for LGBTQ Military Veterans,” the two-day ideas-in-action summit was co-hosted by the Legal Services Center of Harvard Law School, OUTVETS, and Veterans Legal Services. Also spearheading the event was John R. Campbell, Former U.S. Deputy Undersecretary of Defense for the Office of Warrior Care and 2017 Harvard Advanced Leadership Initiative Fellow.

Held April 19-20, it brought together dozens of experts on LGBTQ military and veterans’ matters. Participants who shared their stories, experiences, and best practices included representatives from OutServe-SLDN, the U.S. Department of Veterans Affairs, American Veterans for Equal Rights, the National Veterans Legal Services Program, Dartmouth Hitchcock, Johns Hopkins, and the Massachusetts LGBTQ Bar Association, as well as co-hosts OUTVETS, the Veterans Legal Clinic of the Legal Services Center of Harvard Law School, and Veterans Legal Services.

Canadian Attorneys John McKiggan and R. Douglas Elliott offered their perspectives as co-counsel on the groundbreaking matter of Satalic, et al v. Her Majesty the Queen, a successful national class action brought on behalf of current and former LGBTQ employees of the Canadian Armed Forces, Department of National Defence, and the Government of Canada. The action resulted in a record-breaking $145 million settlement and public apology from Prime Minister Justin Trudeau.

The summit engaged participants in a multi-disciplinary examination of legal and non-legal remedies to enforce the rights of LGBTQ veterans and to honor and fully recognize their military service and unique sacrifices. The Honorable Halee Weinstein, and Paula M. Neira, JD, MSN, RN, CEN, gave powerful keynote luncheon addresses concerning discriminatory military policies against LGBTQ servicemembers, and the transgender service ban, respectively.

Weinstein, one of the few openly gay judges in the Maryland court system, was named Associate Judge, District Court of Maryland, District 1, Baltimore City, in 2002 and has been Judge-In- Charge of Eastside District Court since 2014. She served as a military intelligence officer in the Army from 1984 to 1986 until she was discharged because of her sexual orientation. Weinstein also created and is the current presiding Judge of the Baltimore City Veterans Treatment Court.  Neira was a surface warfare officer whose service included a tour of duty in mine warfare combat during Operation Desert Storm. After the Navy, she found a path toward nursing and law. She is the first transgender Navy veteran to have her DD-214 updated by order of the Navy to reflect her correct name. Additionally, she is the co-sponsor of the USNS HARVEY MILK. She is currently the Clinical Program Director at the John Hopkins Center for Transgender Health.

The summit also dovetailed with Harvard Law School’s (HLS) bicentennial celebration and engaged alumni in the second day’s “hackathon” discussions of potential ways to address past and current discrimination against LGBTQ service members and veterans.

“It is genuinely exciting to witness so many individuals committed to advancing the rights of LGBT veterans. Symposia like the HLS Hackathon give me hope that there are still possibilities for positive change within our society,” said participant Hanna Tripp, who serves as a Military and Veteran Fellow in the Office of Congressman Joseph P. Kennedy, III.

Results from the summit’s working groups are currently being compiled into a more formal report which will be released in the next few weeks, but overall participants left the event feeling energized and hopeful, echoing Ms. Tripp’s comments.

“OUTVETS is honored to have been part of this amazing summit,” said Bryan Bishop, Commander of OUTVETS, a Boston-based LGBTQ Veterans Organization and the first ever LGBTQ organization to march in the Boston St. Patrick’s Day Parade.  “It never ceases to amaze me how, when we put our heads and hearts together, we can develop ideas that help the most vulnerable of our Veterans.  It is so important to remember that it is the one Veteran standing in front of us that is the most important.  This summit represents the beginning of an energized movement that works together to break down walls so no Veteran is left behind.”

Anna Richardson, Veterans Legal Services
Julie Rafferty, Legal Services Center of Harvard Law School

A Warrior for Veterans

Legal Services Center Staff Attorney Evan Seamone was first attracted to the military growing up in Los Angeles, joining the Junior Reserve Officer’s Training Corps (ROTC) in high school when he discovered that students from all walks of life, including many undocumented immigrants, were part of the program.

“Students teaching students, melting pot happening – sign me up,” Seamone remembers thinking at the time.

And when the Junior ROTC brought in a Judge Advocate General (JAG) Corps officer as part of a Vietnam War court martial simulation, Seamone found his calling.

Seamone brings 15 yeaEvan Seamoners of experience as a military lawyer to his role in the Veterans Legal Clinic at the Legal Services Center (LSC) of Harvard Law School. He has served in the Army in Iraq, in Germany, and on U.S. military bases, working on cases ranging from sexual assault to the death penalty. Seamone continues to serve his country as a member of the Reserve JAG Corps, and periodically is called away to represent military personnel.

He also brings academic expertise to his role at LSC, having previously served as Professor and Director of the Legal Writing Program at Mississippi College School of Law, as well as supervising students in that school’s Veterans Law Clinic.

Since joining Harvard in May 2017, Seamone has helped dozens of former U.S. military members fight discrimination, obtain benefits from the Department of Veterans’ Affairs (VA), and gain a sense of support in the veteran community.  His work is supported through a generous grant from the Massachusetts Attorney General’s Office. The grant funds legal assistance to veterans seeking services such as VA healthcare, housing and education assistance, discharge status upgrades, and general legal representation.

Reaching Out

At LSC, Seamone has dedicated his time to advocating for the Commonwealth’s most vulnerable veterans, including LGBTQ veterans, incarcerated veterans, and victims of military sexual trauma (MST).

He has found that those most in need of help are often those least able to access basic health care and financial services from the VA.

Consequently, he has spearheaded several targeted outreach efforts, engaging with local Veterans’ Centers, attending community events in Boston, meeting with veterans who are incarcerated in county jails, and visiting neighborhoods where vets have struggled to access resources and obtain benefits.

Seamone recounts attending community events at local supermarkets, homeless shelters, and even local attractions like the Franklin Park Zoo in an attempt to identify veterans in need of services. “I walk the line and ask, ‘Are you a veteran, have you served in the military?’” he explains.

He has also dedicated much of his time to communicating with incarcerated veterans.  At the Middlesex House of Corrections, about 30 veterans are housed together in a specialized unit called HUMV, the first correctional unit in Massachusetts specifically designed for individuals who have served in the military.  Seamone meets with them regularly, and is currently working on developing transition plans for these veterans so that they are better able to take advantage of resources and benefits upon release.

Seamone notes these incarcerated individuals face especially harmful stigma.  Many feel embarrassed or ashamed of their situation and are reluctant to even identify as veterans.  As Seamone explains, “they have the identity of someone who fights to defend values of the country, not someone who violates them.”

Doing Away with Don’t Ask, Don’t Tell

One of his major efforts is now focused on identifying veterans who have suffered the repercussions of the military’s “Don’t Ask, Don’t Tell” (DADT) policy and its precursors. These discriminatory policies prevented members of the LGBTQ community from serving in the military or, often, had the effect of driving out of the military those who served while hiding their sexual orientation or gender identity.

Seamone emphasizes that negative byproducts of discriminatory policies like DADT have included surveillance and interrogations, civilians and service members ‘informing’ command about homosexual activity, non-sexual extortion, and sexual assault.

Moreover, LGBTQ veterans who were forced to conceal their sexual identities due to DADT face elevated risk of panic attacks, PTSD, depression, suicide and substance abuse.

More than 114,000 gay and lesbian soldiers had been forced out of the military, many with less than honorable discharges, from the 1940s to the time that DADT was rescinded by President Obama in 2011. Even if an individual received an honorable discharge, their discharge papers may mention “homosexuality” as a reason for leaving the military, which can create stigma when applying for a job or accessing medical or other veterans’ benefits.

Moreover, there persists a sense of alienation for many LGBTQ service members: many feel unwelcome in the military community because of their sexual orientation, and may not receive a warm reception within the LGBTQ community because of their military affiliation.

This ‘double closet’ creates a situation in which veterans “face additional risks beyond those normally faced by non-LGBTQ veterans, such as PTSD from combat,” says Seamone.

To address these problems, Seamone is working to reach out to this community and help them obtain the upgrades to which they are entitled.

Seamone has engaged with such local organizations as OUTVETS and Veterans Legal Services, keeping an open line of communication with LGBTQ and veterans’ community leaders.

In February, Seamone and colleagues from LSC’s Veterans Legal Clinic convened a community event for nearly 50 individuals who serve the veterans’ community in Massachusetts to identify ways to conduct more effective outreach to LGBTQ veterans.

In addition to that, a “Hack-a-Thon” was organized as part of Harvard Law School’s alumni weekend in April to engage both experts and Harvard Law School alums to brainstorm ideas for reversing the adverse effects of years of discrimination in the military against members of the LGBTQ community.  These negative effects range from vets being denied years of veterans’ benefits due to less than honorable discharges to being at increased risk of suicide and a host of medical problems because of how they were treated while in service, when discharged, and once leaving the military.

Having set a goal to increase the Veterans Legal Clinic’s outreach efforts by 20 percent, Seamone has far exceeded that benchmark, achieving a 100 percent increase.  Seamone estimates that in all, he is providing individualized service in one way or another to over 60 veterans at any given time.

In the Trenches: Fighting the Stigma of Mental Illness

While Seamone’s work is focused around LGBTQ vets and other veterans groups who need legal help, it is not his only interest. He recently published a paper in the peer-reviewed Journal of Law & Education entitled “In the Trenches of Legal Academia: Recognizing and Responding to the Mental Health Needs of Law Students Who Have Served in the Nation’s Armed Forces.”

The publication surveys existing research and offers potential prescriptions for easing problems faced by vets suffering from traumatic brain injury or PTSD who are navigating the high-pressure environment of law school.

A Holistic Approach to Helping Veterans

To speak to Seamone is to realize how fulfilled he is by his work, and to understand the energy and passion he puts into every case.

Seamone recognizes that it is not always just legal aid, but other forms of assistance that may drastically improve a client’s life. He adopts a holistic approach, going into each case asking, “What is it that this client needs and how can we meet those needs?”

As he puts it, although he is an attorney and not a social worker or mental health provider, “that doesn’t mean I can’t benefit from the knowledge of other professionals.”

Recognizing that many clients with sensitive issues and traumatic experiences are intimidated by a legal process that can be re-traumatizing, Seamone has developed relationships with mental health providers to provide coordinated care.  This has included offering clients the option of speaking to a counselor to decide how much information they feel comfortable sharing and providing on-site counseling assistance after discussions of particularly traumatic events.

“It’s About the Validation”

Seamone lights up as he speaks about the payoff of his work, explaining that the “breakthroughs” clients have when their cases are resolved are almost always far more meaningful — for him and for the veteran — than any amount of benefits or back pay.

He has come to understand that “it’s not about the money, it’s about the validation…it can give them something they haven’t had for years.”

For veterans to have their stories heard, and to be told that the system has not forgotten them, is a transformative and powerful experience.

Seamone succinctly sums up his work with a simple statement about his clients, yet one that many of them do not hear enough: “They are worth it.”

–Taylor Mahlandt


When Student Debt is Not Only Predatory, But Racist

Predatory colleges exploit the promise of higher education by targeting African Americans and people of color with lies and deceptive marketing tactics.

An ad used to run on daytime TV: a young woman of color is talking about how she “has a young child” and needs to “hold down the household.” But this didn’t stop her from getting an education. So those like her should “get up” and call this college, where “a whole team of people” is waiting to help.

On the surface, it may seem like an inspirational ad tailored to a specific demographic. But when you consider that it was aired by the notoriously harmful for-profit Corinthian Colleges, it takes on a different tone.

Corinthian Colleges aggressively marketed itself to unemployed people with racially targeted campaigns. It spent over $600,000 for just two weeks of ads on BET. Nationwide, enrollment in Corinthian-owned schools was heavily African American and Latino (53%), and female (over 70%). In Massachusetts, the student body at Everest Institute (a Corinthian school) was 85% female, and a vast majority of the students were people of color. Corinthian spent far more money convincing people to enroll than it did providing quality job training. In fact, graduates of Everest programs earned less than the typical high school graduate in Massachusetts, but were left with devastating debt.

These tactics of racist targeting are standard operating procedure of federally-funded for-profit colleges. They are successful because higher education is held out as the path to the middle class. For generations, there have been public messages reminding the African American community in particular of the promise of higher education, from W.E.B. DuBois’s “talented tenth” to the United Negro College Fund’s “a mind is a terrible thing to waste” campaign. For-profit colleges take up this messaging, claiming to provide “access” to higher education when in fact they provide access to unpayable debt for programs people are more likely to drop out of than finish. Less than one in five students who enroll in a federally-funded for-profit school will ever graduate.

The debt associated with federally-funded for-profit colleges is not only predatory, it’s racist. That is because this industry targets its harmful products in explicitly racial terms. The industry claims to be increasing access to education and compares its schools to historically black colleges. Whereas historically black colleges are authentic cornerstones of the African American community, forged at a time when higher education was legally denied to people on the basis of race, corporations like Corinthian target people on the basis of race, blatantly exploiting and profiting off of inequality. Nobody should confuse these two types of institutions.

Among the more pernicious effects of the predatory for-profit college industry is that it compounds the effects of entrenched, systemic racism that has unfairly advantaged some while unjustly disadvantaging others.  African Americans who go to college end up with a disproportionate amount of federal student loan debt, and more loan defaults.  In fact, Department of Education statistics show that close to 70% of African Americans who borrowed to attend a for-profit college had defaulted on their loans a decade later. One reason that outcomes may be so poor is that less than a quarter of the money that federally-funded for-profit colleges raise from students actually goes to their education.  The rest goes to slick marketing and advertising, executive compensation, and profits for owners and shareholders.

Unpayable debt from a useless credential closes the path to the middle class for thousands of African Americans.  This is the opposite of what the federal student loan program ought to do.


Click here to see our page about the racial injustice of the for-profit college industry.

New Tax Rules To Pose Challenges for Low-Income Taxpayers in 2018

As taxpayers file their federal and state income taxes for 2017, many are wondering what effects the federal Tax Cuts and Job Acts (TCJA) passed by Congress in December will have on what they will owe when they file returns for 2018.  For low-income taxpayers, particularly those with children aged 17-23, those whose children do not have a social security number or who depend on public housing, and anyone who gambles, the questions are especially acute.

According to Keith Fogg, the Faculty Director of the Federal Tax Clinic at the WilmerHale Legal Services Center of Harvard Law School, some of the federal changes under TCJA are not going to be “helpful at all” to low-income individuals.  In late January, Fogg was one of 15 experts selected to testify before the Massachusetts House and Senate Joint Committee on Revenue regarding the impacts of TCJA on low-income taxpayers.

Massachusetts does not automatically adopt the federal government’s tax code to determine state income tax rules, but rather picks and chooses which statutes it will apply at a state level. As a result, testimony by Fogg and his colleagues will be particularly crucial as state officials examine whether and how to adjust state tax codes in response to the federal tax overhaul.

Overall, the tax cuts enacted under the federal bill may hardly be noticeable – the final draft of TCJA settled on an after-tax income cut of 0.4 percent for households making under $25,000 per year.  That comes out to about $60, on average, according to the Urban-Brookings Tax Policy Center of the Brookings Institute

Those in the top 1 percent of earners – that is, those who are making more than $3.4 million per year — will see much a larger dollar tax benefit, and as a percentage of their earnings it will be nearly three times as large as the low-wage earners.  The average household in this tax bracket will see cuts amounting to $51,000.  However, that number is significantly lower than the $175,000 proposed in the earliest version of the bill, according to the Urban-Brookings Tax Policy Center.

Although the income tax cuts may go unnoticed, particularly by the lowest wage earners, there are other ways in which TCJA could directly and adversely affect the lives of low-income taxpayers.

Tax bill hits low income families hard

One of the changes about which Fogg is most concerned is the removal of the dependency exemption and the subsequent expansion of the child tax credit.

Prior to the passage of TCJA, parents could claim a dependency exemption of up to $4,150 for each child they were supporting financially.  The effect of that exemption was simply to reduce taxable income, so parents would pay less in taxes.

However, under TCJA, the dependency exemption is gone, as part of an effort to simplify the tax code.

Consequently, to ‘make up’ for the loss of the dependency exemption, the child tax credit was increased from $1000 to $2000 under TCJA, and the level at which an individual or dual wage earners could qualify was increased.

The expansion in itself does not pose any problems for low-income families.

“Where it fails,” explains Fogg, “is when children do not qualify for the child tax credit.”

Indeed, while the dependency exemption covered dependent children up to age 23, the child tax credit only applies to taxpayers with children under the age of 17.  As a result, individuals with dependent children aged 17-23 will lose out not only on the dependency exemption, but also on the child tax credit as well.

Yet “the problem of the mismatch between the loss of the dependency exemption and the child tax credit doesn’t only apply to children,” says Fogg.

In fact, it applies to any person who would have been claimed as a dependent under prior law as a qualified relative.  Qualified relative dependents do not cause the taxpayer to receive the child tax credit.  So anyone who was taking care of elderly parents or other relatives or who had unrelated persons living with them for the entire year will no longer receive any tax benefit for this support to others.

Noncitizen immigrants also hit hard

 Another population disqualified from receiving the child tax credit are children without a Social Security number, who are overwhelmingly undocumented immigrants.

While documented immigrants are able to file for a Social Security number for their children –after they provide ID and their work-authorized immigration status with the application – undocumented immigrants are unable to do so.  Barring those without a Social Security number from receiving the child the tax credit places many vulnerable noncitizen families at risk, with the issue again being exacerbated by the repeal of the dependency exemption.

Tax rules eliminate incentives for public housing

Additionally, an indirect aspect of TCJA that affects lower-income populations is the elimination of incentives for investment in public housing.  The result of this is that those who need this assistance to cope with high prices in the housing market could face homelessness.

Gamblers beware

Finally, those who like to take the occasional trip to Foxwoods, as well as more serious gamblers, may struggle with alterations in the wagering laws introduced in TCJA.  To illustrate the differences between TCJA and the previous tax code, Fogg provides the example of a gambler who wins a few thousand dollars then loses that same amount shortly thereafter.

In the past, that individual could report both his winnings and his losses when filing taxes.  Now, with the repeal of miscellaneous itemized deductions in TCJA, the gambler can only report the few thousand dollars of winnings, while the equal amount that he or she lost is not taken into account in determining taxable income.

This may result in a significantly higher tax rate for frequent gamblers, many of whom are elderly or low-income.

Timeline for Massachusetts decision

With these changes in mind, the question becomes what Massachusetts will choose to do in response to TCJA’s passage.

Since the federal legislation affects the 2018 tax year instead of 2017, the state will have until next fall to come to a conclusion.

What sort of resolution would Fogg like to see?

Though admitting at this point that the details “are a work in progress,” he says he hopes Massachusetts lawmakers “will look at the broad issues stemming from this and create laws that will protect low-income taxpayers and ease some of the fallout from the federal tax rules.”

— Taylor Mahlandt


LSC To Celebrate Its 40th Anniversary April 5, 2019

The Legal Services Center of Harvard Law School  turns 40 in 2019.  A series of activities, culminating in a celebration on Friday, April 5, 2019, will recognize the organization’s  40 years of fighting for fairness and justice and its work meeting the community’s legal needs, training the next generation of lawyers, and fostering legal, economic, and social change.

Check back to this page for details on activities planned and for more information about the Friday, April 5, 2019 celebration.

Partial Borrower Defense Denials Violate Due Process, Privacy Act: Injunction Sought Against DeVos, Department of Education

A court filing over the weekend revealed that the U.S. Department of Education secretly, illegally, and unconstitutionally used Social Security data to deny loan discharges to students cheated by Corinthian Colleges, Inc. Four borrowers, on behalf of a nation-wide class, seek an injunction to block the administration from applying its recently-announced plan to partially deny student loan relief to which defrauded borrowers are entitled, and that the Department had previously provided to certain cohorts of Corinthian borrowers through the borrower defense application process set up by the Department.

The motion for an injunction and amended complaint were filed in federal court in California as part of a class-action lawsuit brought by the former students of Corinthian-owned for-profit colleges. The borrowers and the putative class are represented by the Project on Predatory Student Lending of the Legal Services of Harvard Law School and Housing and Economic Rights Advocates.

“The Department of Education had already unfairly and unlawfully refused to cancel these bogus loans for so long,” Project on Predatory Lending attorney Joshua 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.”

Earlier this month, the Department notified certain former students that, because their “average earnings” were not less than half of the “average earnings” of some unspecified group of students who went to a different, non-Corinthian school, they must repay their loans. In coming up with this murky and convoluted calculation, the Department secretly and illegally gathered information about borrowers’ earnings from the Social Security Administration. Perversely, the Department obtained the data from SSA pursuant to an information sharing agreement entered into for the purpose of protecting the public at large from predatory institutions like Corinthian by publishing “gainful employment” metrics.

“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 who is representing plaintiffs.

For borrowers who were scammed by Corinthian and then waited months or even years for the relief that the Department promised them, the “average earnings rule” is yet another government-inflicted intensification of Corinthian’s harms.

One of the named plaintiffs representing the nation-wide class is Jennifer Craig of Baldwin Park, California. She attended a medical billing and coding program at the Corinthian-operated Everest College—City of Industry. Recruiters convinced her to enroll in the program with assurances that she would get a job, using falsified job placement statistics. Despite completing the program, she has never been able to get a job as a medical biller. She has only been able to get the same minimum-wage jobs that she worked at before going to Everest. She applied for cancellation of her loans in 2016, using an “attestation form” that the Department of Education created especially for Corinthian borrowers. Last week, she was informed by email (included in the filing) that the Department had applied its “average earnings” calculation, and she must repay 80% of her loans. She and her husband, who lost his job earlier this year, are barely able to make ends meet. They have three children, including a three-month old daughter.

Another family impacted by the Department’s actions are Zovinar Tchouldjian and Alina Farjian of Los Angeles. Alina, who submitted a declaration in support of the motion for preliminary injunction, attended Everest in Receda for medical assisting. Her mother, Zovinar, borrowed Parent PLUS loans to help pay for the program, despite her reservations that the school could support her daughter, who was in special education programs throughout her schooling. They were convinced by the job placement rates that Everest recruiters showed them. Alina has never worked as a medical assistant. She currently drives for Lyft. Both Zovinar and Alina applied to the Department for loan cancellation. Zovinar’s loans were completely cancelled months ago. Alina learned last week that the Department had used its “average earnings” rule to determine that she must repay 70% of her loan.

The plaintiffs are asking the court to order the Department to stop applying the Average Earnings Rule; to keep applying the Job Placement Rate Rule by granting complete relief to borrowers in the findings cohort; and to rescind the partial denials it has issued. The Department’s current conduct is illegal in numerous ways, including:

  • The Department’s failure to explain its rationale, its inability to provide borrowers with the data underpinning its calculations, and its illogical reliance on this data to decide individual claims violate the Due Process Clause of the Constitution and is arbitrary and capricious;
  • The Department’s capricious adoption of the Average Earnings Rule constitutes impermissible retroactive rulemaking in violation of the Administrative Procedure Act;
  • The Department’s abandonment of the Job Placement Rate Rule is arbitrary and capricious and denies class members the relief they have been promised and on which they relied; and
  • The Department’s use of average earnings violates the Privacy Act by secretly and unfairly deploying individuals’ information to determine their rights.

Massachusetts Senator Elizabeth Warren raised flags in January about the Department’s misuse of Social Security data in a letter to the Department’s Inspector General, asking for an investigation into the use of earnings data to make decisions on partial relief for defrauded student loan borrowers.

The borrowers and the putative class are represented by the Project on Predatory Student Lending of the Legal Services of Harvard Law School and Housing and Economic Rights Advocates. The First Amended Complaint is posted here, and the Motion for a Preliminary Injunction here.

About HERA

Housing and Economic Rights Advocates (HERA) is a California statewide, not-for-profit legal service and advocacy organization dedicated to helping Californians — particularly those most vulnerable — build a safe, sound financial future, free of discrimination and economic abuses, in all aspects of household financial concerns. It provides free legal services, consumer workshops, training for professionals and community organizing support, create innovative solutions and engage in policy work locally, statewide and nationally.

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of the predatory for-profit college industry. Its mission is to litigate to make it legally and financially impossible for the for-profit college industry to cheat students, and to relieve borrowers from fraudulent student loan debt.

The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt. It has also brought its clients’ experiences to bear on federal and state policymaking.