Multiple Class Action Lawsuits Tackle Defaulted Student Loan Debt

• Author: Mary Singleton
• Posted: 2024-08-24

Student loan debt problems preceded Betsy DeVos, but student loan debt leaves students and graduates powerless to control vast sums of money transferred in their name and social security number. Student loan lawsuits are filed by government agencies, and class action lawsuits to resolve student loan woes move at a snail's pace. The Tresury Department through it's "TOPS" program garnished stimulus checks from the Internal Revenuse Service even though it was illegal for creditors to demand stimulus funds as payment for debt. Agencies collect extra payments and fees by incorrectly processing student loan payments, delaying student loan forgiveness, and garnishing wages and income tax refunds. Sadly, payments obtained through wage garnishments offset the servicers' fees and costs. The loan balance remains untouched.
 

The Department of Treasury Garnished Stimulus Funds

In the United States District Court of the District of Columbia, taxpayers filed agaisnt the Department of the Treasury and the Department of Education for processing $1.8 billion in student loan offsets despite the CARES Act and Secretary DeVos's direction to return the money to the taxpayers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, temporarily, suspended the collection of student loan payments. The CARES Act also prohibited lenders from coolecting stimulus funds to pay debts. The United States Department of Education withheld the tax refunds of taxpayers with defaulted student loans as has been the practice for at least twenty years. Typically, borrowers have no recourse against the unjust harsh practices of the combined federal departments. Sadly, a $2000 tax refund doesn't reduce the outstanding loan amount. Your $2000 belongs to the agency processing the loan to cover unpaid interest and fees.
 

Did Betsy DeVos Mismanage Student Loan Forgiveness Programs?

Public school teachers filed a class action lawsuit against Betsy DeVos and the U.S. Department of Education in the United States District Court in the Central Division of Utah. A retired public school teacher applied for loan forgiveness in 2014 and was told that she didn't qualify for loan forgiveness, that her payments were inconsistent, and that her loans were of varied types. The Department of Education blames servicers' misconduct implying the Department of Education is aware of the problem but does notihng to solve the problem. The Plaintiffs request forgiveness of their school loans, cessation of all collection activities on their school loans, and restitution. Parties to the class action lawsuit expect a declaratory judgement that their loans are paid in full.
 

Regionally Accredited Grand Canyon University

Plaintiffs filed a seven-count class action lawsuit against Grand Canyon University in the United States District Court for the Northern District of Georgia in Atlanta. The lawsuit holds Grand Canyon University accountable for its violation of the Racketeer Influenced and Corrupt Organizations ("RICO") Act and violation of the Arizona Consumer Fraud Act. Plaintiffs allege that Grand Canyon University is liable for Plaintiffs' damages and owes declaratory and monetary relief to the Plaintiffs. The Plantiff's spent $14,000 and $65,000, repectively, on tuition. Plaintiffs say Grand Canyon promised students certificates or degrees that would lead to certification as a public school teacher or as a professional counselor in their states. Plaintiff's desire more than $5 million dollars in restitution from Grand Canyon University. Grand Canyon University took the complaint into court.
 

Class Action Lawsuits Against Sallie Mae - Navient Drag On

Student loan debt cripples students' credit ratings and leaves them powerless to do control large sums of money transferred in their names. In 2017, the Consumer Financial Protection Bureau and the attorney generals of California, Illinios, Mississippi, Pennsylvania, and Washington filed government agency cases against Navient, formerly Sallie Mae. Navient increased borrowers' student loan debt by putting their loans in forbearance instead of putting their loans in a low-cost repayment plan. Navient processed payments incorrectly and entered false information on credit reports. The agency complaints seek restitution for consumers' damaged by Navient. Damages sought range from $1,000 to $10,000 per student. Class action lawsuits have also been filed against Navient, but all the cases will take years to settle.

The Biden Administration inherits the student loan debt problem. As Betsy DeVos condemns loan forgiveness programs, resolving student debt issues will improve the credit scores of millions of borrowers and imediately put billions of dollars into our national economy. Will Joe Biden continue with Betsy DeVos as Education Secratary or will he embark on new education policies?