Project on Predatory Student Lending News: Updates on Court Cases and Government Officials

In recent years, there have been significant developments in the fight against predatory student lending. A major court case, known as the Navient case, has made headlines for its potential impact on the industry.

The Navient case involves allegations that the company, which was once the largest student loan servicer in the US, engaged in deceptive and unfair practices. This includes falsely telling borrowers they were eligible for forgiveness programs.

Government officials have taken notice of the issue and are taking action. The Consumer Financial Protection Bureau (CFPB) has been actively investigating student loan servicers, including Navient, for potential wrongdoing.

The CFPB's investigation is focused on whether these companies are providing adequate information to borrowers about their options and rights. This includes the possibility of forgiveness programs and other forms of relief.

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The CFPB and regulatory actions are taking a strong stance against predatory student lenders. The CFPB, along with the ITT Trustee and states, has settled with a private lender to eliminate millions in debt.

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This settlement is a significant step towards holding accountable those who have cheated students out of their hard-earned money. The CFPB and regulatory agencies are working to protect consumers and ensure that lenders operate fairly.

The settlement with the private lender will help to alleviate the financial burden on over 750,000 former ITT students who were affected by the massive fraud committed by the institution. Millions of dollars in debt will be eliminated as a result of this settlement.

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The Project on Predatory Student Lending has been a key player in the fight for student loan relief, representing borrowers defrauded by their colleges. Eileen Connor, the president and director of the Project on Predatory Student Lending, is a vocal advocate for borrower defense.

Borrower defense refers to the provision in law that federal student loan borrowers should not be forced to repay loans for classes or degrees from schools that have lied to, deceived, and misled them. This safeguard is an important protection for student borrowers.

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Nearly 5 million federal student loan borrowers have benefited from $175 billion in debt cancellation provided by President Joe Biden and others. However, some borrowers have watched their prospects for relief ensnared by litigation.

The Project on Predatory Student Lending has been involved in several high-profile cases, including Sweet v. Cardona, which applies to nearly 300,000 borrowers who had a pending borrower defense application as of June 22, 2022. This cohort is split into two categories: the automatic relief group and the decision group.

A separate group of about 200,000 borrowers, called the “post-class” group, can also get Sweet v. Cardona relief. $1 billion in fraudulent student debt was cancelled for 72,000 borrowers, demonstrating a major policy shift.

Borrower defense regularly comes under attack by hostile administrations, the for-profit college lobby, and trade groups with direct financial interests in removing accountability guardrails and keeping the spigot of federal money flowing to profit-making ventures.

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The government has taken steps to address the issue of predatory student lending. A federal judge has ordered the Department of Education to notify the court and borrowers before issuing borrower defense denials.

The Department of Education has also faced criticism for its handling of borrower defense claims under Secretary Betsy DeVos. Almost 130,000 claims were denied, with some decisions made in as little as 12 minutes.

The Biden administration has proposed canceling up to $10,000 in student loan debt, but President Biden has expressed opposition to canceling debt beyond this limit. Borrowers in the decision group are entitled to the same full settlement as borrowers in the automatic relief group.

Here is a summary of the decision notification timeline for borrowers in the decision group:

The Biden Administration's approach to student loan forgiveness has been met with some challenges. Student loan forgiveness processing appears to have stalled for tens of thousands of borrowers under a key debt relief program.

This has left many borrowers in limbo, unsure of when or if they will receive the relief they were promised. The processing of these loans has been a complex and time-consuming process.

As a result, borrowers are advised to stay informed and up-to-date on any changes to the program. Borrowers can check the official government website for the latest information on student loan forgiveness.

The Biden Administration has been working to address the issue, but it's clear that more work needs to be done to ensure that borrowers receive the relief they need.

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The Biden administration is taking a closer look at for-profit colleges, which is a big deal for the over 170,000 class members who spoke up for their rights to loan cancellation.

For four years under President Trump, these colleges were largely deregulated, which led to a lot of controversy. Now, consumer advocates and lawmakers are pushing the Biden administration to take action.

A federal judge has ordered Education Secretary Betsy DeVos and the U.S Department of Education to notify the court and borrowers before issuing borrower defense denials. This is a significant development for students who were defrauded by their colleges and are seeking loan cancellation.

Betsy DeVos is also facing scrutiny for her handling of student loan forgiveness claims. Under her leadership, the Department of Education denied almost 130,000 claims from students defrauded by for-profit colleges. According to The New York Times, this decision was made in just 12 minutes per claim.

For-profit colleges are bracing for a major reckoning as the Biden administration takes a closer look at their practices. With the Department of Education under new leadership, it's possible that we'll see changes to the way student loan forgiveness claims are handled.

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People affected by predatory student lending share their stories, highlighting the devastating effects of these practices. They often find themselves in dire situations, such as being sued by the U.S. Department of Education.

Jared's experience with South University is a stark example of this, as he was left stranded and scammed after the college chain collapsed. Andrea's story is another, where the Department of Education seized her tax refunds to pay for bogus student loan debt from Corinthian Colleges, affecting her entire family.

These stories demonstrate the need for a public reckoning on student debt and an end to predatory lending practices.

I'm so grateful for the work of the Project on Predatory Student Lending, which has helped countless people like Kristina, who attended Virginia College and was left with debt after being defrauded by the school.

Their team is incredibly moved by hearing from people whose fraudulent student loans have been cancelled because of their litigation. This is a testament to the impact of their work.

The Project on Predatory Student Lending has been fighting for years to get documents from the Department of Justice, which they requested nearly three years ago. Despite a court order in their favor, they're still waiting.

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Their efforts have led to major policy shifts, such as the cancellation of $1 billion in fraudulent student debt for 72,000 borrowers. This is a huge victory for those who were defrauded by their colleges.

The team's dedication and perseverance have earned them recognition, including Toby Merrill, the director and founder, being honored as a finalist for the David Carliner Public Interest Award.

Eileen Connor, the president and director of the Project on Predatory Student Lending, is confident in their ability to defend discharges of student loans, even if the policy changes under a new administration.

Andrea's story is a powerful reminder of the devastating effects of bogus student loan debt. She's a single mother who was left struggling after the Department of Education seized her tax refunds to pay for debt from Corinthian Colleges.

Andrea's experience is not an isolated one; the Department of Education has a history of seizing tax refunds to pay for debt from for-profit colleges that have been found to be predatory.

Andrea's family suffered greatly as a result of the Department of Education's actions, highlighting the need for greater protections for student borrowers.

The Project on Predatory Student Lending is working to bring about change and ensure that student borrowers like Andrea are treated fairly and justly.

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A lot of people assume that student loan borrowers all attended fancy colleges, but the truth is that only a very small share of them did.

According to CNBC, only a tiny fraction of student loan borrowers attended elite colleges.

Attending an elite institution can be a significant financial burden, but it's not the reality for most student loan borrowers.

In fact, CNBC found that the vast majority of student loan borrowers attended non-elite colleges.