Darnell Williams and Yessenia Taveras, former students of Everest Institute in Massachusetts, a subsidiary of the now-defunct Corinthian Colleges, Inc., filed a lawsuit in federal court to challenge the government’s continued collection of defaulted federal student loans from Corinthian schools. The Project on Predatory Student Lending represents Mr. Williams and Mrs. Taveras in this lawsuit.

Background

Mr. Williams, a resident of Dorchester, Massachusetts, attended a massage therapy program at Everest Institute, formerly located in Chelsea, Massachusetts. Mrs. Taveras, a resident of Peabody, Massachusetts, attended a medical assistant program there. In 2015, Everest and its parent corporation, Corinthian, shut down amidst widespread allegations of fraud. In 2016, the Department of Education seized Mr. Williams’s and Mrs. Taveras’s federal tax refunds to pay their federal student loans from Everest Institute.

The lawsuit filed by Mr. Williams and Mrs. Taveras alleges that the government has been illegally seizing funds from borrowers who have defaulted on their loans from Corinthian schools. Although the government has broad powers to collect defaulted federal student loans, it may not seize funds from borrowers when it knows that the defaulted student loan debts are not legally enforceable due to a school’s fraud.

The government has already acknowledged the widespread fraud at Corinthian schools. Secretary of Education John King Jr. stated, “When Americans invest their time, money and effort to gain new skills, they have a right to expect they’ll get an education that leads to a better life for them and their families. Corinthian was more worried about profits than about students’ lives.”

Moreover, thanks to the Department of Education’s own investigation and an application for loan discharge submitted to the Department by Massachusetts Attorney General Maura Healey on behalf of all former Corinthian students in Massachusetts — including Mr. Williams and Mrs. Taveras — the Department knew about Corinthian’s fraud at the time it seized the tax refunds of Mr. Williams and Mrs. Taveras.

Mr. Williams and Mrs. Taveras are not the only Corinthian borrowers affected by the government’s refusal to stop seizing money from borrowers it knows were defrauded. In late 2016, Massachusetts Senator Elizabeth Warren released shocking information in a letter to the Secretary of Education that the Department of Education is collecting from nearly 80,000 former Corinthian students.