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In a Second Rebuke to Department of Education, Federal Court Refuses to Relinquish Case of Corinthian Borrower

In its latest ruling on October 31, 2017, the United States District Court for the Central District of California demanded that the Department of Education respond to the allegations of Sarah Dieffenbacher, a mother of four who was defrauded by Everest, a Corinthian Campus in California.

Sarah’s case began when the Department threatened to garnish her wages to pay off her student loan debt, despite her numerous requests that the Department cancel the fraudulent debts. In response to the lawsuit, the government asked the court to send the case back to the Department so that it could continue to consider Sarah’s case without court oversight, but the court denied the request and ordered the Department to consider Sarah’s discharge applications by September. The Department failed to do so.

Instead, the Department issued an “interim order” purporting to withdraw its wage garnishment order and, in September, informed the court that it would take another six months to consider Sarah’s loan discharge application. In response, the court asked the parties to explain whether the Department’s actions should prevent the court from hearing the case. Sarah filed a detailed brief explaining that they did not; the Department filed three pages.

In its latest ruling, issued on October 31st, the court agreed with Sarah, denying the Department’s attempts to take this case out of federal court and ordering it to answer Sarah’s complaint within 20 days.

The court’s refusal to relinquish the case represents another rebuke of the Department’s efforts to deny Sarah her legal right to loan forgiveness, and another step toward vindicating Sarah’s rights. Sarah is legally entitled to have her loans from this fraudulent school cancelled, and the Department of Education’s refusal to acknowledge that she is entitled to loan cancellation is shameful. We will fight the Department of Education as it continues to side with the predatory industry instead of the students and taxpayers it is charged with protecting.

Robyn Smith, of the Legal Aid Foundation of LA, is co-counsel with the Project on Predatory Student Lending in Sarah’s case.