California sues Trump administration on behalf of students seeking debt relief

U.S. Department of Education Releases Additional Funding to Support Schools and Students Impacted by Hurricanes

Secretary of Education Betsy DeVos today announced $10.4 million in additional funds to assist students at more than 900 schools affected by the recent natural disasters. The agency has been inundated with applications from former students of defunct for-profit chains Corinthian Colleges and ITT Technical Institutes. A separate lawsuit was filed by California.

California is suing the Trump administration for what it says is the U.S. Department of Education's refusal to provide debt relief to more than 13,000 students that courts have found were defrauded by the since-shuttered for-profit Corinthian Colleges.

The attorneys general are asking a U.S. District Court judge to declare that all student loan debt incurred by students at Corinthian schools is not legally enforceable by garnishing taxes or wages; to order the department to refund any money that was garnished; and to order the department to discharge all student debt from these students.

These lawsuits stem from investigations done by federal agencies and state authorities that found that Corinthian Colleges and other for-profit schools enticed students with false promises about graduation rates and post-graduation job prospects.

He noted in a teleconference with reporters that the lawsuits were filed the same day President Donald Trump touted his administration's efforts to roll back federal regulations.

Students who have applied for loan discharges may also have delinquencies and defaults related to this debt on their credit report, making it more hard for them to get jobs or rent apartments, according to the lawsuit.

"It's time for secretary DeVos to do the work that was done by the previous secretary of education to help students seeking debt relief", Becerra said, on a call with reporters Thursday. The Department announced a streamlined process by which former Corinthian students could apply for that relief. The agency has in the past described other lawsuits filed by Democratic attorneys general as a partisan attack on the Trump administration. All the attorneys general are Democrats.

The Department of Education's inspector general said this week that, while the procedure for processing claims could be improved, the system works well enough that there is not a good excuse for the department not to clear the backlog of claims. The inspector general said acting under secretary James Manning has refused to sign off on those claims because the new administration needed time to review the policies put in place by its predecessor. More than 1 in 4 of those students with pending debt relief claims resided in California. As of July, there were 65,000 repayment claims pending, including 1,000 from students in MA. Many have placed their loans in forbearance, a grace period they can extend while waiting for approval. Richard J. Durbin (D-Ill.) that the forbearance period was nearly up. She said students who are frequently tripped up by the application process for the Free Application for Federal Student Aid are typically the same students who have already demonstrated need through federal programs like SNAP and TANF.

Legislation passed in the wake of the devastating storms-the Hurricanes Harvey, Irma, and Maria Education Relief Act of 2017-provided the flexibility for the Department to award the supplemental funds to impacted schools, as well as impacted students. The education department has allowed debt collectors to continue going after these loans, even though it is aware that these students qualify for relief, according to Healey's lawsuit.

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