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NYLAG sues Secretary of Education for Failing to Notify Former Wilfred Students

Salazar v. DeVos

Wilfred American Education Corporation (Wilfred) was a national chain of for-profit trade schools that engaged in widespread fraud and went out of business in the early 1990s. Wilfred Schools were the subject of several federal investigations in the 1980s and 1990s, and the people who ran it were subsequently convicted of federal financial aid fraud. When a school has falsely certified that a particular student is eligible for student loans, students can quality for a “false certification discharge” that forgives and reimburses student loans disbursed after January 1, 1986. The false certification discharge includes what is known as the ability-to-benefit (ATB) discharge for students who did not have a high school diploma or G.E.D. and were not given or did not pass an approved ATB test, but were still certified by a school as eligible for federal student loans. Wilfred falsely certified thousands of students as being eligible for financial aid when they did not have a high school diploma or G.E.D., and did not pass an appropriate test.

In February 2014, NYLAG sued the US Department of Education (USED) because USED violated federal law by refusing to notify former Wilfred students that they may be eligible to seek discharge of their loans if Wilfred falsely certified them to take out those loans. In August 2017, the Court approved a settlement between USED and the thousands of former students, which required USED to notify these students that they may be able to get their loans canceled, bringing the possibility of millions of dollars of financial relief for the students. USED has estimated that over 61,300 federally guaranteed student loans were made to Wilfred School attendees. USED has also estimated that 60% of these borrowers were falsely certified by Wilfred as having the ability to benefit from Wilfred’s program, and should therefore be eligible to have their loans discharged.

If you attended Wilfred Academy, American Business Institute, or Washington School of Secretaries and obtained a federally guaranteed student loan, in whole or in part after January 1, 1986, contact NYLAG at (212) 659-6162.

More Information:

Name: Salazar v. DeVos

Dkt. #: 14 Civ. 1230 (S.D.N.Y.2014)

Judge: Hon. Robert W. Sweet

Status: Settled

Claims:

Violation of the Administrative Procedure Act for failure to mail the required notice.

Highlights:

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