California sues DeVos over debt relief for defrauded students

The state of California is suing Education Secretary Betsy DeVos for refusing to process the debt relief claims of thousands of students who had federal student loans and were left in the lurch after the collapse of Corinthian College.

The 25-page complaint filed by California Attorney General Xavier Becerra (D) in the U.S. District Court for the Northern District of California on Thursday accuses DeVos of violating the Administrative Procedures Act by unlawfully delaying the approval of claims filed by defrauded students.

“What Secretary DeVos is doing is unconscionable,” Becerra said in a statement.

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“After having their American Dreams stolen by a so-called higher education institution, Corinthian students are now being denied critical relief by a Secretary of Education hostile to their plight. It is hard to believe that we are forced to sue the Department of Education to compel Secretary DeVos to carry out the Department’s legal duty and help these students rebuild their lives,” he said.

The complaint said the department found that in 2015 some 80,000 student borrowers nationwide — including more than 38,000 in California — were fraudulently induced to enroll in educational programs offered by Corinthian, a now-defunct operator of predatory for-profit schools.

DeVos, however, announced in June that she was rolling back a rule that was specifically created to help defrauded students after the collapse of Corinthian Colleges in 2015.

“The Department determined that these students qualified under its ‘borrower defense’ regulations for expedited discharge of their federal student loans and reimbursement of amounts previously paid,” Berecca said in the complaint.

Becerra said since Jan. 20, the department under DeVos has unjustifiably and indefinitely delayed approving even a single borrower-defense claim.

“This delay — 11 months and counting — is unreasonable and illegal because the Department has already determined that these students qualify for specific, expedited relief,” he argued in the court document.