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Tina Carr and Yvette Colon, former students of Career Education Corporation (CEC)-owned Sanford-Brown, filed a lawsuit against the Department of Education and Navient. This lawsuit challenges the continued collection of their student loans, despite the Department’s legal obligation to cancel the loans based on Sanford-Brown’s fraud. The Project on Predatory Student Lending and NYLAG represent Ms. Carr and Ms. Colon in this lawsuit.

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Sanford-Brown, owned by Career Education Corporation (CEC), engaged in outright deception to induce Tina Carr and Yvette Colon to enroll in its vocational programs for medical jobs. The school lacked the necessary accreditation and did not provide adequate training. Sanford-Brown also lied about its dismal track record in preparing students for medical vocations. Ms. Colon and Ms. Carr are not alone in having been defrauded by SBI. 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 job placement statistics to Ms. Carr of 80%, the OAG found that the actual placement rate was only 26.1%. Further, the OAG found widespread deception concerning programmatic accreditation, and broad failure to disclose that graduates generally could not transfer credits to legitimate schools. The OAG concluded that these practices violated New York’s consumer protection statutes.

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.

On November 12, 2017, Ms. Carr and Ms. Colon filed a lawsuit against the Department of Education and Navient challenging the illegal collection of their loans. The promissory notes Ms. Carr and Ms. Colon signed give them the right to assert claims based on Sanford-Brown’s misconduct against the Department of Education and Navient. Ms. Carr and Ms. Colon asked the court for an immediate adjudication of their defenses to repayment of their loans.

Negotiated Rulemaking

This week the Department of Education will begin a second negotiated rulemaking on Borrower Defense. This session comes as a result of the Department’s blatant and continued effort to deny students the relief they deserve.

On November 1, 2016, the Department published final Borrower Defense Regulations that were to take effect Ju1y 1, 2017. These rules, among other things, would have guided the Department’s processing of borrower defense claims and included a ban on harmful forced arbitration clauses and class action waivers.

However, on June 16, 2017, the Department not only delayed the implementation of those regulations, but indicated that it would initiate a new negotiated rulemaking to rewrite the Borrower Defense rule.  Then, in October, the Department further delayed the rule until July 1, 2019.

Student borrowers, including Ms. Carr and Ms. Colon, have waited long enough. Regardless of the Department’s efforts to deny cheated students relief, it still has legal obligations to the tens of thousands of waiting borrowers.

Below are comments that Ms. Carr submitted prior to the last negotiated rulemaking more than two years ago:

Had SBI kept its promises, I would have gladly paid back the loan. But they left me in such a lurch, misstating their claims of success, when their only motive was to look for a profit. I feel totally betrayed and trickedit was a theft and a betrayal.

Now, for the Department to send me so many confusing and inaccurate notices, and to fail to respond to my claim, its devastating. Its like theyre hitting me when Im down, instead of offering any solutions.

Im at the bottom of the barrel now, just struggling and clawing to survive, and theyre looking to make things worse for me rather than give me some relief.

The process so far makes me lose confidence that the Department is on top of the rules and understands the problemsthat theyve actually thought about their actions and how theyre going to affect me on a personal level.

I can only hope that rather than making things worse, the Department will live up to its end of the bargain, and provide the relief owed to me and so many other borrowers.

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