Judge Orders Corinthian Colleges Student Loans to be Canceled

Before you get all excited, this only applies to students in Massachusetts.

The Predatory Student Lending project that is part of the Legal Services Center of Harvard Law School released the following press release on this update.

Today, a federal judge ordered the Department of Education to cancel the student loans of all 7,200 former Corinthian Colleges students in Massachusetts. This is the first time a federal court has ordered a borrower defense discharge of federal student loans.

The victory in Vara v. DeVos comes nearly two years after the Department of Education was ordered to stop collecting on the borrowers’ loans because they were covered by a borrower defense application that was filed by the Massachusetts Attorney General. The lawsuit demanded that the Department grant the Attorney General’s borrower defense application and cancel the students’ fraudulent loans.

The Everest schools in Massachusetts were operated by Corinthian Colleges—less visible perhaps than some for-profit chains like University of Phoenix but a juggernaut in its day, with over 100,000 students enrolled in 35 states and online, taking in over a billion dollars per year in federal student aid dollars. More than eighty percent of students enrolled in Everest in the commonwealth were women, and more than three in four students were Black or Latinx.

Everest deployed a Spanish-language recruitment strategy to aggressively recruit immigrants from Spanish-speaking countries. This strategy worked on one of the plaintiffs, Kennya Cabrera, a former student who immigrated from El Salvador. She told Everest recruiters that her English skills were limited, and that her mother was even less comfortable with English. Everest conducted the recruitment, enrollment, and financial aid processes in Spanish. But her classes were in English and she didn’t understand a lot of what the teacher was saying. After graduating from Everest, she was fired from her first job because her English skills were not strong enough. She subsequently obtained a GED but still has never found a job in her field.

“This ruling is a clear and powerful statement of the rights of student borrowers, and a resounding rejection of the Department of Education’s ongoing and across-the-board refusal to recognize these rights and cancel fraudulent student loans. Our clients, and all 7,200 Massachusetts students who were cheated by Corinthian, and have been waiting nearly 5 years for the Department of Education to acknowledge their right to loan cancellation,” said Project on Predatory Student Lending Director Toby Merrill. “We thank Attorney General Healey for her long-term commitment to fighting for these borrowers, and look forward to the day when five-year, three-lawsuit battles to cancel obviously fraudulent debts are not necessary.”

“Thousands of Massachusetts students cheated by Corinthian have finally had their day in court, and they have won,” said Massachusetts Attorney General Maura Healey. “This landmark victory for students will cancel the federal loans for thousands of defrauded borrowers, mostly Black and Latinx students, targeted by a predatory for-profit school and abandoned by Secretary DeVos and the Trump Administration. For five years, our office and the Project on Predatory Student Lending have fought to win students the relief they deserve and today we have won decisively.”

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According to the decision:

  • ED can’t escape its obligations under the law by simply writing off the loans of people who happen to sue;
  • Contrary to ED’s assertions, a federal court may review ED’s actions and inactions with respect to borrower defense;
  • ED must act in a consistent and rational manner and must explain its actions;
  • “Overwhelming” evidence shows that ED has, in the past, repeatedly exercised its discretion to cancel federal student loans in response to an application, supported by evidence, from an Attorney General;
  • “Overwhelming” and “uncontradicted” evidence establishes that the plaintiffs and their classmates are entitled to cancel their loans because of Corinthian’s flagrant and widespread misconduct;
  • So that students are no longer caught in “a game of ping-pong,” the Court instructed the agency to take action within 60 days consistent with the court’s order granting relief to all borrowers.


The Vara v. DeVos lawsuit was filed in federal court in Boston in October 2019, following students’ October 2018 victory in Williams v. DeVos. The ruling in that case acknowledged that the Attorney General had lodged a borrower defense application on behalf of all Massachusetts Corinthian borrowers, and ordered the Department to consider the application and to stop seizing borrowers’ tax refunds while the application was pending. That case laid the groundwork for Attorneys General across the country to demand that the Department consider their applications for loan cancellation on behalf of students in their state who were cheated by predatory for-profit colleges.

In response, the Department ignored the judge’s ruling that the entire group of 7,200 Massachusetts students was protected by the Attorney General’s borrower defense application. The Department has continued to ignore the AG’s application, treating the other Massachusetts Corinthian borrowers as if they had not objected to the legality of their debt. Students brought Vara v. DeVos, and Attorney General Healey brought a companion case, Commonwealth v. DeVos, both arguing that the Department had rejected the AG’s application by ignoring it, and that the Department must discharge the debts of all covered borrowers based on the evidence.



In 2015, the Massachusetts Attorney General asked the Department of Education to immediately cancel the debts of ALL of the approximately 7,200 students who borrowed federal student loans to go to a Corinthian-operated school in Massachusetts because Corinthian’s extensive fraud means that all of them have borrower defenses. She supported her request with thousands of pages of evidence, and a state court found in her favor in a case against Corinthian, ordering the then-bankrupt company to repay every penny that it collected from Massachusetts students. The company never paid a dime, and the Department never gave a definitive response to the application.

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In 2016, the Project on Predatory Student Lending filed the lawsuit Williams v. DeVos on behalf of two former Corinthian students whose tax refunds were seized, despite the fact that they were included in the group discharge application. The Department of Education is prohibited from seizing tax refunds to collect debts that are not legally enforceable, and without deciding on the AG’s borrower defense application, the Department was unable to find the plaintiffs’ debts legally enforceable.

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In October 2018, the court agreed that the Department had unlawfully collected on these students’ loans, and that students are protected by the Attorney General’s group borrower defense application. The court found that:

  • The Attorney General’s application was a valid borrower defense application “for each and every individual” listed (all 7200+).
  • The Department had an obligation to consider, and then grant or deny this application.
  • The Department acted illegally when it took the Plaintiffs’ tax returns in 2016 because it did so without even considering the evidence in the AG’s application.

The Court gave the Department 60 days to issue a decision “on the merits of the AG’s application, with respect to the two individual plaintiffs.” The Attorney General weighed in on the case in support of the plaintiffs.

In February 2019, at a hearing on compliance with the October order, the Department made clear that it was still not treating the AG’s application as a valid borrower defense application for the 7200+ people, and ignoring the court’s order to make a decision on the application as to the two plaintiffs. The court gave the Department 30 more days to comply. Then the Department voluntarily cancelled the loans of the two plaintiffs, in an attempt to end the case without contending with the AG’s submission.


About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students. The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.

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