Student Defense, the Project on Predatory Student Lending, and the National Consumer Law Center filed a lawsuit on April 25, 2022 against U.S. Education Secretary Miguel Cardona and the Department of Education on behalf of student loan borrowers with unresolved Borrower Defense to Repayment claims. The lawsuit, filed in the federal District Court of Massachusetts, alleges the Department has for six years ignored its responsibility to issue a decision on a group borrower defense application submitted by the Massachusetts Attorney General (AGO) in May 2016 on behalf of eligible former students of the now-defunct Kaplan Career Institute.
This lawsuit builds upon a successful case the Project on Predatory Student Lending brought against the Department of Education under Betsy DeVos. In that case, Vara v. Cardona (formerly Vara v. DeVos), a court in the District of Massachusetts established that the Department of Education has a legal obligation to act on group borrower defense applications brought by state attorneys general.
“This six-year failure is unconscionable, given the detailed evidence of misconduct that the AGO provided to the Department,” the lawsuit states. “As this court stated nearly two years ago, ‘the [Department] [is] not free to simply ignore such an application.’ With respect to the Kaplan Group Applications, the Department has done precisely that.”
Under federal law, defrauded borrowers are eligible for debt relief under the Borrower Defense to Repayment program. The Massachusetts Attorney General submitted evidence of Kaplan’s deceptive and illegal practices — uncovered during a sweeping investigation — with the group application for relief submitted in May 2016. However, the Department has failed to grant any known claims on behalf of former Kaplan students and the Biden Administration has not ruled on a single State AG group claim.
The press release issued after this case was filed is available here.
Update: On August 16, 2022, the Department of Education announced that it would approve federal student loan discharges for all Kaplan borrowers identified by the Massachusetts Attorney General in her May 2016 group borrower defense application – the entire putative class in this case. Student Defense, PPSL, and the National Consumer Law Center continue to monitor the proposed discharge.
News Coverage
Groups Sue Education Dept. Over Borrower Defense | April 27, 2022 | Inside Higher Ed
Defrauded borrowers sue over six-year-old student-debt-relief claim | April 26, 2022 | The Washington Post