Judge Tosses California Suit Over Student Debt

SAN FRANCISCO — A U.S. judge threw out a lawsuit June 27 by the state of California accusing the Trump administration of illegally reneging on an Obama-era commitment to quickly forgive the loans of students defrauded by the Corinthian for-profit college chain.

The state had failed to establish it had the right to bring the lawsuit against the U.S. Department of Education, Magistrate Judge Sallie Kim said. She gave the state 30 days to amend its lawsuit.

The state attorney general’s office said it was deeply committed to championing the rights of hardworking students and would either appeal or amend the lawsuit.
Education Secretary Betsy DeVos announced in December that some students cheated by the now-defunct Corinthian schools would only get a part of their federal student loan forgiven. DeVos said the new process would allow students to be treated fairly while also protecting taxpayers from unjustified costs.

In order to determine how much to forgive, the agency analyzed average earnings of graduates from similar programs.

In May, Kim ordered the Education Department in a related case to stop collecting debt from students. She ruled that the practice of using Social Security Administration data in order to calculate loan forgiveness violates privacy law.

California’s lawsuit preceded the new loan policy and alleged that the Education Department under DeVos was delaying approving claims from Corinthian students seeking to discharge their loans.

It sought a court order requiring the department to approve and grant full loan relief to all pending and future claims submitted by former Corinthian students.

Kim said in her decision Wednesday that the state had failed to clearly show how it was harmed by the delay – a necessary step to establish its right to bring suit.

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