Earlier this week, two student loan borrowers filed a lawsuit against the U.S. Department of Education and the student loan servicer Navient.
Tina Carr and Yvette Colon from the Sanford-Brown Institute, a for-profit college in New York, claimed they were defrauded by their education institution. The pair of debtors are looking to have their loans erased. According to their attorneys, the case could become a landmark for the thousands of students seeking loan relief who experienced similar trouble.
Originally part of the Career Education Corporation chain of colleges, the Sanford-Brown Institute ended its activities back in 2015, leaving nearly 30,000 students with student debt and no diploma to show for (or at least a diploma of value). In Carr and Colon's view, the college misled them regarding career training curriculum and their career prospects.
Colon wanted to become a cardiac sonographer. Therefore, she attended the Sanford-Brown's respective certificate program. Upon graduation, the student found out she was unable to transfer her credits to other schools since her academic credentials were not valid.
Now, Colon is taking legal actions against the Education Department, chaired by Betsy DeVos, asking to have her $21,000 in federal and private student loans erased.
Tina Carr planned to work as a medical assistant. She claimed that Sanford-Brown Institute lied to her both about job placement assistance and her eligibility to transfer academic credits to another university. On these grounds, Carr wants to see her $14,500 in federal student loans forgiven.
Since Betsy DeVos took office earlier this year, she has cast doubt about the preservation of landmark initiatives from the Obama administration concerning student loan relief of defrauded for-profit college students who were struggling with payments; more specifically, she has suggested changes to the Borrower Defense Rule.
Last month, DeVos said she was considering granting only partial relief to defrauded students in a new scheme relying on industry income to an expected career path. For now, however, the Borrower Defense Rule is still potentially applicable, explaining the reasoning behind this most recent lawsuit.