Attorney General Becerra Announces Action in Support of Students Defrauded by Corinthian Colleges


thank you for joining us today we want
to recognize a few people before we begin today’s press conference so if
you’ll indulge me a bit this is becoming a bit of a habit we’ve done this on a
number of occasions unfortunately to discuss matters that are important to
all our families because I think every family in America hopes that if they’ve
got children at some point they can aspire to see their children go to
college do what my parents never got to do I know there are a lot of families
out there that are looking at their kids as the first to have that opportunity
and so it’s an important subject we have today unfortunately as I said it’s a
subject that we’ve had to discuss on previous occasions as well and no one
wants to go through this but here we go I’m going to introduce a couple of folks
who will make some remarks and I’m going to introduce a couple of other folks who
are part of the Department of Justice team here in California who have done so
much of the work to put us where we are today
so first I’d like to introduce our two speakers Dahlia ikemen is a professor
here at University of California at Irvine and mr. Seth frogmen who is the
former student loan Ombudsman at the Consumer Financial Protection Bureau who
resigned from the CFPB because he didn’t believe CFPB and this administration
were following through on their obligations to actually protect students
I want to also acknowledge a couple of members of the California Department of
Justice team who have been working these cases Barnea secondary
who is here who is a supervising Deputy Attorney General and Eleanor Blum who is
a special assistant attorney general in the office they have been working on
these consumer cases the student college student loan cases for the Department of
Justice and I thank them for their effort we’re here to announce another
action to protect our students whether here in California beyond our
students who wish and aspire to go to college as California’s Attorney General
one of my top priorities is keeping America’s dream within reach for all of
our families and certainly for all those young people who want to work hard be
tenacious juggle their responsibilities and still figure out a way to get
through college roughly 53 percent of graduates in
California schools take out loans to finance their education I should know
that because I was one of them I was the first in my family to have an
opportunity to attend a four-year university to graduate and to take out a
lot of money in student loans from the federal government I played by the rules
my college played by the rules my loan servicer in those days played by the
rules and our federal government well it had my back I got educated and
importantly I repaid my loans because of that education that’s the way it should
be fair and square we’re here in Santa Ana today not far
from the former headquarters of a predatory for-profit business known as
Corinthian Colleges that did not play by the rules Corinthian and it’s predatory
practices were shut down by the California Department of Justice it by
its tenacious investigative team by its prosecutorial team that worked so hard
to make sure that Corinthian saw justice at the end of the day for the tens of
thousands of students who got defrauded and paid tens of thousands of dollars in
student loans to end up with a worthless piece of paper and no ability to repay
those student loans one of the products of the work that the
California Department of Justice did back then working on shutting down
Corinthian was to pursue a better way of taking care of those who defrauded
students working with the then Obama administration the federal government
worked with us to establish what was called and is called the borrower’s
defense rule which allows student victims of Corinthian College and other
predatory for-profit institutions to have their federal loans discharged so
they can reclaim part of that American Dream they’re working so hard to pursue
unfortunately with Secretary of Education Betsy DeVos at the helm at the
US Department of Education we have seen her turn back the clock and we have seen
her turn her back on our students delaying and denying debt relief leaving
thousands of students and former students saddled with a worthless
diploma and a mountain of debt so the state of California has taken secretary
DeVos to court in July of 2017 California and 18 other states filed a
suit against the Department of Education for unlawfully delaying the
implementation of the borrower’s defense rule we also brought our own lawsuit
here in California against secretary DeVos in December of 2017 to challenge
your department’s failure to process tens of thousands of Corinthian students
borrowers defense claims today we lend our support to a separate but related
lawsuit Calvillo Manriquez versus DeVos the suit the suit that we’re supporting
at this stage was brought by students who were defrauded by these colleges
these students security preliminary injunction that stopped secretary de Vos
from providing only partial relief on their claims for fraud but the
Department of Education is now appealing that court’s order in favor of the
students the Department of Education essentially is attempting to continue
its illegal practice so today the state of California is
leading a coalition of eight states in standing up for these students we’re
filing a friend of the court brief in the Ninth Circuit challenging secretary
DeVos is failure to provide relief to these students I want to thank the
attorneys general from Illinois Maryland Massachusetts New Jersey New York North
Carolina and Washington for their support I also applaud the work of the
two organizations standing up for students in this case housing and
economic rights advocates and the Harvard Legal Services Center we work
with both organizations in the past within art with our work protecting
students this is not California’s first action to protect students who have been
victimized by predatory for-profit colleges and it won’t be our last we
sued navient the nation’s largest student loan servicer for systematically
and illegally failing borrowers at every stage of the repayment process we’re
currently litigating against a so-called University Ashford University and its
parent company Bridgeport education over illegal marketing and debt collection
practices practices against students by the way I should also add that many of
Bridgepoint education executives are now government officials in that very
Department of Education that secretary DeVos runs whether it’s a for-profit
college or the federal government no one gets to cheat our students and get away
with it we won’t stop fighting to protect America’s college students their
families and that American Dream and with that I now like to turn it over to
pressor professor Jimenez from the UC Irvine School of Law professor thank you thank you Attorney General
Becerra good afternoon my name is Talia Jimenez
and I’m a law professor at the University of California Irvine where I
teach consumer law and business courses I’m gonna be an academic for a minute
and talk about government regulation regulation gets a bad rap to hear
President Trump tell it if we only had less regulation all of our economic
worries would go away this is wrong on so many levels it’s not because
government regulation is perfect it isn’t and in fact most of my job is
criticizing it but without rules setting a level
playing field and with a serious enforcement of those rules we all suffer
regulation ensures that we have safe food to eat safe water to drink and air
to breathe and save consumer products arguments that the quote market will
take care of it or that quote companies have an incentive to treat their cunts
their customers right or savings from regulatory burdens will be passed on to
consumers ignore both reality and history in the consumer finance context
we have abundant evidence that misleading consumers is a lucrative deal
it seems like every day we learn about some new scam or some new way in which
our company is abusing consumers individuals are not in a position to
protect themselves that’s why we have government and government agencies
regulations protect consumers but they do more than that they protect the
market they help to ensure that the companies who are trying to play by the
rules and trying to do things right are not disadvantaged by competing against
companies who are not doing so we need good rules and we need good enforcement
of those rules unfortunately this administration does not seem interested
in doing either of those things the Trump administration and Secretary DeVos
is Department of Education are failing to protect student loan borrowers from
predatory companies we’re trying to make a quick buck on the back of students the
department’s own research has shown that students who enroll in for-profit
schools pay more borrow more and default more than students and traditional
nonprofit educational institutions those students and the taxpayer deserve our
protection but instead of protecting the federal student aid program and students
secretary DeVos wants to open to overturn the gainful employment rule
now the gist of this rule is that it denies federal student funds to schools
who cannot turn out graduates who can earn a living I was drafted in response
to collapse as a Corinthian Colleges ITT and others because of the abundant
evidence that these schools were had engaged in deceptive and misrepresented
practices in other words the gainful employment rule is designed to weed out
schools that have no business calling themselves schools those schools do not
deserve federal dollars instead of this rule Secretary of DeVoss proposes to
replace it with one that simply requires schools to list information in their
website information that most of them already disclose now you’ve heard just
about the borrowed offense rule well instead of protecting students from
predatory schools secretary DeVos wants to destroy the bar at the fence rule as
you’ve heard today the goal is to ensure that students were lied to by their
school get the relief they are owed and that those schools are held responsible
for their behavior instead of this accountability for schools who have
defrauded their students the department wants to hamstring the ability of
students to obtain relief the department proposes to set short limits on how long
students have to make claims against predatory schools and to give schools
the ability to contract their claims and to mandatory arbitration where they can
sweep complain to under the rug instead of celebrating public service and
implementing federal statutes the department wants to thwart the goals the
public service loan forgiveness program by unconscionably delaying or refusing
to forgive the loans of thousands of borrowers and in its latest budget
proposal the Trump administration once actually and the public service loan
forgiveness program student loan borrowers deserve government officials
that work for them state attorneys generals like Attorney General Becerra
are stepping in to fill the gap left by federal agencies like the Department of
Education this is good news for student borrowers and taxpayers they deserve
regulation that puts their interests above those of large corporations thank
you now I’m gonna introduce Seth frat men my former colleague at the Consumer
Financial Protection Bureau and the former student loan Ombudsman there thank you very much Dahlia and Thank You
general Becerra it is my privilege to join you today as California continues
to fight for the millions of borrowers drowning under the weight of historic
student debt California is showing the nation how states can be critical
players in the fight for borrower’s rights until last month I had the
privilege of serving as the top student loan official at the Consumer Financial
Protection Bureau I worked with leaders at all levels of government to crack
down on the abuses plaguing 44 million Americans who struggle under the weight
of more than 1.5 trillion dollars of student debt I heard directly from tens
of thousands of student loan borrowers across all 50 states including thousands
of borrowers right here in California their complaints highlight the rampid
illegal practices and inexcusable policy failures that have placed the American
Dream out of reach for far too many across America more than 11 million
borrowers are behind on their student loans for those borrowers and the
countless others who are making their payments but barely getting by
these are kitchen-table financial issues that affect every aspect of their lives
on everything from buying a home to choosing a career from starting a family
to saving for retirement student debt cast a shadow that many
Americans cannot escape as the burden of student debt continues to grow its
shadow also spreads unevenly across our communities we know that people of color
borrow more and more often than their white peers and helping to drive this
divide are predatory for-profit colleges that aggressively and deliberately
target these communities peddling the false promise of Economic Opportunity
the abuses of the largest for-profit colleges stretch back decades first
these companies lied to students to get them in the door by promising a
fast-track to a brighter future then companies loaded these students up
with debts they knew can never be repaid with the ultimate goal of driving large
bonuses to executives and profits to shareholders and when the abuses
committed by the largest for-profit colleges
I only caught up with them these companies sought protection from the
bankruptcy system a system that provides a critical second chance that is denied
to the very borrowers that were preyed upon by these same companies as
Washington raced to catch up to this widespread fraud and the extraordinary
damage it did to American families the Obama administration took steps to offer
these borrowers a fresh start it built a path for borrowers to escape
the fraudulent lien clerk incurred debt that underpin this illegal business
model but even before the Trump administration said its foot in the door
it had its sights set on gutting these protections and in the early days of
this administration secretary de Vos stonewalled thousands of borrowers who
are already pursuing these protections leaving them quote partially buried
under fraudulent debt then she slammed the door on thousands of future
borrowers that should have been eligible to seek relief and now she is proposing
to effectively shut down any path to debt relief for defrauded borrowers
while also denying millions more the right to demand justice through the
courts these actions are nothing short of brazen and illegal fortunately these
egregious efforts have been met with strong opposition from state attorneys
general including general Becerra and by organizations like the housing and
economic rights advocates and the Harvard project on predatory student
lending these organizations and Attorney General Bruce era are the champions for
justice that millions of borrowers so desperately need and today’s
announcement is another sign that this fight will continue that these rollbacks
will not go unchallenged but it is clear that we must do more we must create a
different and better future for student loan borrowers one in which we do not
overlook the predatory actors that prey on their vulnerabilities one in which we
do not treat student loan borrowers as second-class citizens simply because the
word student precedes the word loan one in which we do not accept that Betsy
DeVos alone controls the financial futures of more than 40 million
Americans in important ways this future begins here in California this date has
the chance to deliver on that promise made to the 4 million
was living here and to paint a starkly different picture than the one offered
3,000 miles away and California is beginning to do just that
ensuing navient general Becerra has fought back against abuses that harm
borrowers living in communities all across California practicing hurting
every type of borrower with every type of loan in every stage of repayment and
the California Legislature has made sure that the Department of Business
oversight has the authority it needs to go after the companies that are harming
the nearly four million people in this state who owe student debt but we must
not forget that Betsy DeVos and the rest of the Trump administration will use
every tool at their disposal to stymie these efforts tens of millions of
student loan borrowers now have a federal government that is not only
walking away from the fight but is arming the other side this is why
California’s work to protect student loan borrowers is so important and this
is why I’m proud to be here as general Becerra and the state of California
shows us how state government can and must be a fierce advocate for borrower’s
rights one that stands up to special interests and fights on behalf of
families with student debt this is how in the face of an increasingly hostile
federal government we start to make progress this is how we drive lasting
reform across the student loan system and protect the millions of student loan
borrowers too often left behind but this is just the beginning this is going to
be a long hard fight and I am proud to stand with attorney general Becerra
and with California every step of the way thank you to Professor Jimenez and
mr. Rothman we say thank you very much for your words we have some charts that
give you a sense of the magnitude of this issue the number of students that
are waiting for the relief that they thought they had these are all young
member men and women who may still need to finish college may no longer be in
college because he can’t afford it but are still facing a mountain of debt that
was supposed to be relieved and here you get a sense of what the
federal government under the Trump administration and secretary de Vos has
been doing and you can see what happens when you have young Americans who want
to have that chance at the dream confront a government that is unwilling
to have their backs thank God some of us got through before we started
to see this because we could easily be right here with these folks any
questions we’ll take them now

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