Today, a replacement lawsuit was filed against Navient, the scholar loan servicer formerly referred to as Sallie Mae.
The suit was filed by the Project on Predatory Student Lending at Harvard school of law on behalf of Jorge and Alicia Villalba. Jorge Villalba may be a former student at the now-defunct ITT who borrowed quite $50,000 in federal student loans to attend the varsity . On top of that, Jorge also took on quite $43,000 privately student loans, a number of which his mother, Alicia, co-signed.
During the Obama administration, numerous complaints were filed against ITT for creating promises about employment and earnings of graduates that were untrue. In Jorge’s case, he says he was promised he would earn about $64,000 upon graduation which large employers loved hiring ITT students.
Many investigations by the federal and state attorneys general concluded that ITT had defrauded students and, in 2016, the U.S. Department of Education cut the varsity faraway from receiving federal student grants and loans. Like most for-profit colleges, federal student aid made up an outsized swath of their revenue and ITT was forced to shut its doors and file for bankruptcy.
Under federal education law, students can have their student loans discharged if they’re defrauded by their college, also referred to as the “borrower defense to repayment” rule. because of the borrower defense rule, Jorge was ready to get his federal student loans discharged in 2017. But that also left him with an outsized sum of personal student debt.
The lawsuit filed today says that Jorge’s private student loans should even be discharged. It says that Jorge presented his borrower defense application and therefore the federal government’s approval for forgiveness to Navient as evidence of fraud on behalf of ITT so his loans might be forgiven. However, Navient rejected his request for cancellation. The suit also alleges that Navient said Jorge didn’t have a right to hunt forgiveness supported ITT’s fraud, albeit the method to try to to so was in his student loan contract. The case says that by doing so, Navient misled Jorge about his right to receive forgiveness.
Closed School Loan Discharge program
This discharge program is for former ITT Tech students now looking for student loan forgiveness options.
You might be qualified for a closed school discharge if you did not complete your education in an ITT school because they were closed while you were attending or soon after you withdrew. A closed school loan discharge is a 100 % discharge of the federal Direct Loans, Federal Family Education Loan Program loans, or Federal Perkins Loans you took out to attend the closed school and recompense of payments you have already made.
To apply for student loan forgiveness through a Closed School Discharge program, you can either
– complete and return the Closed School Loan Discharge Application sent to you by your servicer,
– complete a Closed School Loan Discharge Application and return it to your loan servicer, or
– contact your loan servicer about the application process to discharge your loan.
However, students that transfer their credits to another institution would no longer be qualified. Under the Closed School Discharge program, loan amounts forgiven are treated as taxable income and may trigger a substantial tax burden.
Borrower’s Defense to Repayment Discharges
On Thursday, December 13th, 2018 the Department of Education announced that they’re immediately approving $150,000,000 in Borrower’s Defense to Repayment Discharges (BDAR). It includes discharges for people who attended ITT Tech.
The sanctions of the Education Department on Carmel-based ITT Educational Services Inc. have laid support for past students. The goal is to take advantage of this little-known rule, called defense to repayment, which can wipe out their loans.
The defense to repayment rule falls under the U.S. Higher Education Act. It has existed for years but drew little attention until recently.
In the case of ITT Tech, who faces massive lawsuits and $560,000,000 reimbursement in response to their violations for committing illegal behavior against students just like you, Borrower’s Defense Discharges are readily available.
The best thing about BDAR discharges is that they can completely eliminate your loans. It means you won’t have to pay for student loans, but there’s another added benefit as well: you may even be likely to get a refund for the money you’ve already paid back.
Federal law gives the Education Department discretion to forgive student loans for those who claim they were deceived or that their college broke state laws. The government essentially made the claim that ITT has done that.
Thus, they have invited former students to request what could amount to hundreds of millions of dollars in student loan forgiveness. The rule applies to all previous students with federal loans. However, this does not cover private student loans.
In the meantime, the Education Department is encouraging borrowers to email their claims. Instructions are on the Education Department’s website.