Profit companies

For-profit organizations seek to intervene in fraudulent borrower settlement

A major for-profit lobbying organization filed a motion on Wednesday to intervene in a lawsuit that was recently settled by the Department of Education. The motion could block the department’s agreement to automatically discharge $6 billion in student debt for 200,000 borrowers with pending borrower defense claims.

The motion from Career Education Colleges and Universities, the largest national organization representing for-profit colleges, says the colleges in the settlement have been denied an opportunity to respond to pending defense claims by borrowers alleging they defrauded. former students. The motion was expected, as the CECU said it plans to take legal action as soon as the department announces the settlement.

“From discussions with the schools listed in the proposed settlement agreement, several indicated and expressed concern that the Department of Education never informed them of the pending claims of the borrowers’ defense. This lack of notice and the ability to adequately respond violates the due process rights of institutions under the Borrower Defense Program,” said Nicholas Kent, Policy Director for CECU.

CECU is leading the motion to intervene with two colleges named in the settlement, American National University and Lincoln Educational Services Corporation. The University of the Everglades, another college named in the settlement, has filed a separate motion to intervene, and more are expected.

The plaintiffs in Sweet v. Cardona claimed that the Department of Education delayed approval of their borrower defense applications. The settlement, reached in late June, would automatically void all pending claims by borrowers against 150 colleges, all for-profit institutions.

A typical Borrower’s Defense applicant must undergo a review process by the Department of Education, and their college has the opportunity to respond to any allegations of wrongdoing.

The CECU also said in the motion that it was concerned the department was trying to recover funds for student loans discharged from colleges the borrowers attended. The Ministry of Education did not respond to Inside Higher Education when asked if he plans to charge the colleges named in the settlement for canceled student loans.

The settlement is not yet final. It is currently being reviewed by the U.S. District Court for the Northern District of California, which will announce a decision by the end of July. Both the plaintiffs and the Department of Education will be required to respond to each motion to intervene filed with respect to this settlement.

Eileen Conner, director of the Project on Predatory Student Lending, a Harvard Law School legal team that worked on the Sweet lawsuit, responded to the query in a statement to Inside Higher Education and said: “It is disappointing but not surprising that these companies are, as always, watching their bottom line at the expense of students who have suffered serious harm and have waited years for justice.”