Press Release  AG Healey Celebrates Debt Relief Victory for Thousands of Former Corinthian Students in Massachusetts

BOSTON — Today, Massachusetts Attorney General Maura Healey issued the following statement in response to the U.S. Department of Education dropping its appeal of a federal court order canceling the loans of 7,200 students in Massachusetts who were defrauded by Corinthian Colleges, Inc. Corinthian operated two for-profit schools in Massachusetts under the name Everest Institute.

By withdrawing its appeal, the Department has agreed to comply with the U.S. District Court’s June 2020 order, requiring the Department to fully discharge the federal loans of all Massachusetts students covered by AG Healey’s 2015 group borrower defense application, and setting a precedent that group discharge applications filed by state attorneys general are valid and must be decided by the Department.

“Today is a huge victory for the thousands of former Corinthian students in Massachusetts who were cheated by this destructive school, trapped in unaffordable debt, and then forced to wait years to get the relief they deserve,” said AG Healey. “Our office, alongside the fierce advocates at the Project on Predatory Student Lending, stood by these students and their families from the start and hopes that today’s announcement brings some comfort and helps improve financial stability. We thank the Department for complying with this court order and vow to continue our nation-leading work helping students across Massachusetts with their loans and holding predatory schools accountable for illegal practices.”

“I’m thrilled that our clients will finally get the long delayed justice they are owed. This outcome is a credit to their perseverance and advocacy over 6 years of fighting and waiting,” said Eileen Connor, Director for the Project on Predatory Student Lending. “However, there remain hundreds of thousands of borrowers who were also defrauded and are equally deserving of action. We urge the Biden-Harris administration to move with urgency to cancel the debts of former Corinthian Colleges students across the nation who are still carrying this debt. We want to thank Attorney General Healey for her commitment to standing up for the students of Massachusetts and we’re thrilled to deliver this victory today.”

BACKGROUND: 

The AG’s Office has established itself as a national leader on behalf of distressed student borrowers.

In October 2019, AG Healey sued former Education Secretary Betsy Devos to hold the Department of Education accountable for illegally failing to discharge the loans of all 7,200 defrauded students that attended Corinthian College in Massachusetts. The Department had failed to consider a group application the AG’s Office submitted in 2015 seeking cancellation of the federal student loan debt incurred by students who went to the Everest Institute’s Massachusetts campuses, part of Corinthian’s defunct national chain of for-profit schools. AG Healey’s group application included more than 2,700 pages of supporting documentation about the school’s widespread illegal and deceptive conduct.

This application was based on AG Healey’s extensive investigation of Corinthian’s misconduct and the 2014 lawsuit she brought against the school, which resulted in a $67 Million judgment based on the school’s violations of the Massachusetts Consumer Protection Act.

In June 2020, a U.S. District Court judge in Boston ordered the U.S. Department of Education and former Education Secretary Betsy DeVos to cancel the loans of 7,200 students in Massachusetts who were defrauded by Corinthian Colleges – the first time a federal court has ordered a borrower defense discharge of federal student loans. The decision followed the Project on Predatory Student Lending’s case, Williams v. DeVos, in which a federal judge ruled in 2018 that the Department of Education had illegally taken the tax refunds of the plaintiff-students without addressing the AG’s assertion that their loans are fraudulent and unenforceable. Like the Commonwealth, the subsequent Vara v. DeVos (now Vara v. Cardona) lawsuit also demanded that the Department grant the AG’s borrower defense application and cancel the fraudulent loans of all Corinthian students in Massachusetts.

Under the Trump Administration, the Department had refused to acknowledge the state’s group discharge application and continued to collect on these loans, including by seizing student tax refunds and garnishing wages. Former Corinthian students had delinquent or defaulted federal loans listed on their credit reports, which limited their financial and educational opportunities and their ability to obtain employment and housing.

In August 2020, DeVos appealed the ruling and moved to stay the Department’s obligation to discharge the loans. Today, Education Secretary Miguel Cardona announced that the Department would comply with the judge’s order.

Massachusetts borrowers who are looking for student loan help or information should file a Student Loan Help Request at www.mass.gov/ago/studentloans or call the AG’s Student Loan Assistance Unit at 1-888-830-6277.

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