Last week a US District Court in California ruled that the US Dept. of Education (DOE) violated federal privacy laws when it changed the way it determines whether to forgive loans taken by students who were defrauded by the now-defunct Corinthian Colleges. In issuing its ruling, the court granted a motion for a preliminary injunction (in part) sought by the plaintiffs. The ruling orders DOE to temporarily “stop all efforts to collect Plaintiffs’ loans ” pending further proceedings.

Corinthian Colleges operated several schools across the U.S. under different names, including Everest, Heald, and WyoTech. The plaintiffs all attended one of these schools and took out federal student loans to pay their tuition.

According to a 2012 federal agency report, many for-profit colleges engaged in various unlawful practices, including inflating graduation rates, misrepresenting tuition costs and using high pressure sales tactics. The plaintiffs claim that Corinthian Colleges engaged in similar misconduct.

The amended complaint alleges that DOE previously forgave federal student loans for nearly 25,000 former Corinthian students. But DOE stopped granting discharges on January 20, 2017, when President Trump took office. The plaintiffs claim they are among 110,000 former Corinthian students who have applied for but not received student loan discharges.

The court scheduled a further hearing for June 4th. The ruling  warns the parties they should be ready to address several questions at the hearing.

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