Yesterday, Tina Carr and Yvette Colon, two former defrauded students of the for-profit Sanford-Brown Institute in New York, sued the Department of Education (Department) and Navient to block the enforcement of their student loan debt. They sued because of the Department’s failure to act on thousands of borrower defense applications by former students whose debts it has the legal obligation to cancel. The Project on Predatory Student Lending and the New York Legal Assistance Group (NYLAG) represent Ms. Carr and Ms. Colon.
The lawsuit comes just as the Department convenes a second negotiated rulemaking committee in as many years on the subject of borrower defense. But what is happening in Washington D.C. is nothing more than regulatory theater: while claiming to process borrower defense applications, the Department has repeatedly delayed—and in this week’s rulemaking, will attempt to rewrite—a rule that would have clarified the process for borrowers like Ms. Carr and Ms. Colon to seek cancellation of fraudulent student loan debt. The Department has shown that it has no intention to give cheated students a fair hearing, and this rulemaking is further display of its bad faith.
Sanford-Brown, owned by Career Education Corporation (CEC), engaged in outright deception to induce Ms. Carr and Ms. Colon to enroll in its vocational programs. Both students entered programs in medical fields, only to find out after the fact that the school lacked the necessary accreditation and did not provide adequate training. Sanford-Brown also lied about its dismal track record of preparing students for medical vocations.
Ms. Colon and Ms. Carr are not alone in having been cheated by Sanford-Brown. The Office of the Attorney General of the State of New York (OAG) pursued CEC for these deceptions, and found that CEC systematically cheated students like Ms. Carr and Ms. Colon. Although Sanford-Brown representatives cited an 80 percent job placement rate to Ms. Carr, the OAG found that the actual placement rate was only 26.1 percent. The OAG found that Sanford-Brown committed widespread deception concerning programmatic accreditation, and failed to disclose that graduates generally could not transfer credits to legitimate schools. The OAG concluded that these practices violated New York’s consumer protection laws.
In March 2015, Ms. Carr and Ms. Colon submitted defense to repayment applications to the Department of Education and Navient, invoking their right to cancellation of their loans based on Sanford-Brown’s deceit. Despite Ms. Carr and Ms. Colon’s clear legal entitlement to loan cancellation, the Department and Navient have refused to consider their defenses, leaving Ms. Carr and Ms. Colon to struggle—along with tens of thousands of other borrowers whose defenses the Department has ignored—with burdensome and insurmountable student loan debt.
Ms. Carr and Ms. Colon did everything right, including submitting evidence from the OAG that Sanford-Brown deceived them into taking out loans to get an ‘education’ that would never lead to gainful employment. But almost three years later, Ms. Carr, Ms. Colon, and too many other students are still suffering every day from damaged credit and the threat of collection on these unlawful loans. They had no choice but to go to court.
Faced with the Department’s bad faith, and after almost three years of waiting, Ms. Carr and Ms. Colon are asking a federal judge to vindicate their right to be free of unlawful debt. You can read the complaint online here, and visit this page for more information about the case.