The fight has been going on since 2015, when Massachusetts Attorney General Maura Healey filed a suit against the Department of Education to cease collection on the student loans paid out to Everest Institute on behalf of 7,200 students, in light of the Institute’s fraudulent practices. But now a federal judge has ruled that the DoE must approve the discharge of those loans.
Since then, Everest Institute and its parent company, Corinthian Colleges, have gone down in flames. Corinthian closed suddenly later that same year, after more than a dozen states and the federal government pulled their accreditation over deceptive recruitment claims. The chain of for-profit schools attracted students, most of them low-income, women, and minorities, by promising job placements they had no way to offer and claiming partnerships with companies who had made no such agreements. Sixteen thousand students across the country were suddenly out of class, with no way to complete their education and with class credits no more reputable school would honor, and nearly all of them burdened with thousands of dollars in federal student loans.
The Department of Education has been ordered before to cease trying to collect on these loans. In 2018, judges ruled that the loans were fraudulent and therefore unenforceable, but that has not stopped collection efforts.
In October 2019, Healey added Secretary of Education Betsy DeVos to the lawsuit, alleging that she personally led the Department of Education in illegally ignoring court orders to cease collections.
On June 25, 2020, U.S. District Judge Leo T. Sorokin ruled that the Department of Education must approve the discharge of the federal loans of 7,200 victims of Corinthian Colleges, wiping out their debt and the damage it has done to their credit histories.
“Thousands of Massachusetts students cheated by Corinthian have finally had their day in court, and they have won,” Healey said in a statement Friday. “This landmark victory for students will cancel the federal loans for thousands of defrauded borrowers… targeted by a predatory for-profit school and abandoned by Secretary DeVos and the Trump Administration. For five years, our office and the Project on Predatory Student Lending have fought to win students the relief they deserve and today we have won decisively.”