Former For-Profit College Students Sue to Void Loan Debt
NYLAG and the Harvard Law School Project on Predatory Student Lending have filed a law suit against the US Department of Education (Department) and private lender Navient on behalf of two former students of a New York for-profit school. The suit seeks to block the enforcement of their student loan debt. It was filed after the Department failed to act on thousands of borrower defense applications by former students whose debts it has the legal obligation to cancel.
The two students, Tina Carr and Yvette Colon, attended Sanford-Brown Institute in New York City. The school, which is owned by Career Education Corporation (CEC), had promised them good-paying jobs in the medical field once they graduated. Instead, they discovered that Sanford Brown’s programs had a dismal track record in placing students in medical vocations.
The Office of the Attorney General of the State of New York (“OAG”) had earlier found that CEC systematically cheated students like Carr and Colon. Although Sanford Brown representatives cited job placement statistics to Colon of 80 percent, the OAG found that the actual placement rate was only 26.1%. Further, the OAG demonstrated that CEC-operated schools like 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 statutes.
In March 2015, Carr and 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 the students’ clear legal entitlement to loan cancellation, the Department and Navient have refused to consider their defenses, leaving them to struggle—along with tens of thousands of other borrowers whose defenses the Department has ignored—with burdensome and insurmountable student loan debt.
The lawsuit was filed just as the Department convened a second negotiated rulemaking committee in as many years on the subject of borrower defense. “What is happening now in Washington D.C. is nothing more than regulatory theater,” said Toby Merrill, Director of the Harvard Law School Project on Predatory Student Lending. “The Department has shown that it has no intention to give cheated students a fair hearing.”
“Tina Carr and Yvette Colon did everything right. They submitted evidence — substantiated by the Office of the New York State Attorney General — that Sanford-Brown deceived them into taking out loans to get an ‘education’ that would never lead to gainful employment,” said Jane Greengold Stevens, Co-Director of NYLAG’s Special Litigation Unit. “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. We had no choice but to go to court.”
Tina Carr dedicated 18 months of her life to Sanford Brown, graduating with a 4.0 grade point average despite a period of homelessness during her studies, and diligently undertaking an ultimately unsuccessful job search. After graduation, the only employment Carr could find was a part-time retail job paying little more than minimum wage, where she worked for almost four years to make ends meet.
“Sanford-Brown plunged me into lifelong debt, which I can never recover from and which has caused and still does cause me great mental anguish,” said Carr. “It’s disgraceful that the Department of Education has sided with these predatory schools, and allowed them to make victims of thousands of students who were promised a career opportunity and had their dreams dashed as well. My hope is that this lawsuit will expose the harms caused by Sanford-Brown and other predatory for-profit schools, and will wipe the slate clean.”