Education Department ordered to stop collecting debts from defrauded Corinthian College students

Education Department ordered to stop collecting debts from defrauded Corinthian College students
© Greg Nash

A federal judge in California has ordered the Department of Education to stop collecting debts from all students defrauded by the for-profit Corinthian College, which shut down in 2015.

The court ruled in May that the Department of Education had violated privacy laws by using Social Security Administration information to help it determine how much relief defrauded Corinthian students should get based on their earning capacity. 

The department was then ordered to stop collecting debts from the four students who represent a class in a lawsuit challenging the debt relief scheme.  

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Magistrate Judge Sallie Kim on Tuesday in the U.S. District Court for the Northern District of California issued a modified order directing Education Secretary Betsy DeVosElizabeth (Betsy) Dee DeVosDeVos calls Democratic presidential hopeful's education plans 'crazy' What the next Education secretary must do Duke-UNC v. DOE: Riding a wave of mutual antagonism MORE to stop collecting debts from any defrauded student who borrowed a Direct Loan to finance the cost of their enrollment to the college.

“The Department of Education has now been rebuked in court not once, but twice for violating the rights of students it should be serving,” said Toby Merrill, director of Harvard University's Project on Predatory Student Lending, which is representing the students in the case. 

“Corinthian ripped off hundreds of thousands of students and the Department of Education is making it worse by collecting their illegal debts, prolonging their suffering. The Department has the power and the obligation to do the right thing and immediately cancel the debt of cheated Corinthian borrowers, but if they continue to refuse to do it on their own, we will fight them in court until they come around.”

The department has over 100,000 claims for relief from defrauded student borrowers, according to court documents. The Department did not immediately respond to a request for comment.