The Department of Education is forgiving the almost $63,000 student-loan debt an Arizona woman racked up years earlier with a for-profit school that lost its license — but her lawyer says there’s no reason she had to wait so long for the clean slate.
Eighteen years ago, Christine Gold took out loans to learn court stenography with a school that eventually went belly up. Three years ago, she applied for a discharge, saying she deserved loan cancellation because she’d allegedly been scammed by the school. One year ago, she sued the Education Department to force officials into making a decision on her application.
On Wednesday, the sides told a Washington, D.C. federal judge they had reached a settlement.
“I’m just overjoyed because I believe this allows me to have a life again, rather than having to work a lot longer,” said Gold, a 62-year-old secretary in Cottonwood, Ariz. “This was just hanging over me like a huge black cloud.”
‘This was just hanging over me like a huge black cloud.’
The cloud formed in 2001, when Gold enrolled with the Court Reporting Institute. The Seattle, Wash.-based school attracted Gold with its claim that all graduates landed jobs and made at least $65,000 annually, according to Gold’s lawsuit.
Gold attended the school until 2005, withdrawing without a credential to show for her time, effort and money. Washington state regulators pulled the school’s license in 2006, saying it had misrepresented program length, used unqualified teachers and had a single-digit employment rate. The school closed and filed for bankruptcy the same year.
Meanwhile, Gold carried the debt and never became a court reporter.
Lawsuits needed to push along applications
The outcome is a major victory for Gold. Her lawyer says it’s also a revealing look at the Education Department’s glacial pace when it comes to helping debt-laden students from shuttered for-profit schools.
‘The only students appearing to be helped right now by the Department of Education are students who sue.’
“The only students appearing to be helped right now by the Department of Education are students who sue,” said Robyn Bitner, counsel at the National Student Legal Defense Network. “A lawsuit can sometimes get you relief, but that shouldn’t be necessary.”
Gold was trying to wipe away her debts under what’s known as the borrower defense rule.
The rule lets student-loan borrowers discharge their federal student loans if they can show their school misled them.
Lawmakers created the rule in the 1990s, but it gained new visibility after the 2015 demise of the for-profit Corinthian Colleges. The Obama administration started developing a process to handle borrower defense claims from students at Corinthian Colleges and elsewhere.
The Education Department, under Trump administration Education Secretary Betsy DeVos, unsuccessfully tried to toughen the standard borrowers had to prove in order to get a discharge.
The department now has 180,000 borrower-defense applications pending and hasn’t approved any since June 2018, according to statistics the department gave to Sen. Patty Murray, a Democrat from Washington.
Apart from Gold’s case, class-action lawsuits are also challenging the Education Department’s treatment of borrower defense claims.
Critics say the paltry borrower defense approval rate shows DeVos’ general preference for for-profit colleges rather than students.
Bitner said she couldn’t guess why Gold’s borrower defense claim had languished. “We do know that’s the way they were treating all claims, so Christine was not unique,” she said.
‘The Department has a duty to protect students from fraud while also safeguarding taxpayer dollars.’
An Education Department spokeswoman defended the agency against claims it’s ignoring valid applications. “Litigation continues to be the issue here. The Department has a duty to protect students from fraud while also safeguarding taxpayer dollars,” said spokeswoman Angela Morabito.
Gold is the first Court Reporting Institute student to get debt relief, as far as Bitner knows.
The Washington Attorney General’s office is representing other Court Reporting Institute students seeking debt relief under the borrower defense rule. The office initially estimated it was representing about 335 students from the defunct school.
“The Department of Education needs to do the right thing and help students who have been saddled with unfair debt for more than a decade as a result of CRI’s unfair and deceptive practices,” Washington state Attorney General Bob Ferguson said in a statement.
DeVos’ Education Department is stingy in other ways, critics contend.
The American Federation of Teachers is suing the department, alleging it has mishandled a loan-forgiveness program for public sector workers. Applicants have a less than 1% success rate when seeking loan-forgiveness after 10 years of repayments.
An Education Department spokeswoman previously told MarketWatch the agency is “faithfully administering the complex program Congress passed.”
‘So defeated for so many years’
Many former students say debts from defunct for-profit colleges upended their lives and career plans, and Gold is no different.
‘I felt completely and totally like a failure. I felt very depressed at times. It made my heart sick, to tell you the truth.’
Gold hasn’t been able to advance her career or her salary, her lawsuit said. She’s worked in secretary jobs similar to the jobs she held before enrolling at the Court Reporting Institute, according to the filing. The expanding loan balances hurt Gold’s credit score and crimped her ability to buy a car.
“I felt so defeated for so many years because I spent so much money trying to get a skill, and I didn’t get that,” Gold said. “I felt completely and totally like a failure. I felt very depressed at times. It made my heart sick, to tell you the truth.”
But this is a bit of redemption, she said.
“Before, I wasn’t even going to think about retirement. This takes that weight away,” Gold said. “It lets me sit down and actually make a plan for retirement.”
Add Comment