District Court certifies class suing Department of Education over borrower defense claims

Courts Class Action Student Lending Department of Education Borrower Defense

On October 30, the U.S. District Court for the Northern District of California certified a class of borrowers who allegedly applied for student loan relief based on their higher education institution’s misconduct but have yet to receive a decision from the Department of Education. The borrowers allege that the Department has arbitrarily and capriciously stonewalled its own process for adjudicating the borrowers’ defense claims under the Higher Education Act, which “allows the Department to cancel a student federal loan repayment based on a school’s misconduct.” The borrowers claim the Department has failed to decide a borrower defense claim since June 2018. According to the borrowers—former students of for-profit schools with claims dating back to 2015—“the Department’s inaction continues to cause putative class members ongoing harm.” The Department argued, however, that the class should not be certified because the borrowers’ claims rely too much on individual circumstances and fail to prove a “systemic policy of inaction[.]” The court disagreed and certified the class, stating that the borrowers “have identified a single uniform policy—namely, the Department’s alleged ‘blanket refusal’ to adjudicate borrower defenses—which ‘bridges all their claims.’” Moreover, the court noted that “this alleged uniform policy is supported by the undisputed fact that the Department has failed to adjudicate a single borrower defense claim in over a year.” The class does not include borrowers who are part of a separate action filed against the Department (covered by InfoBytes here).