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Advocates Sue DeVos, Department of Education for Illegal Debt Collection

WASHINGTON, DC - The National Student Legal Defense Network (NSLDN) filed a class action lawsuit today on behalf of student borrowers who have been subjected to illegal debt collections by the U.S. Department of Education. The students attended the now-defunct Minnesota School of Business (MSB) and Globe University, which were found by both a Minnesota court and the Department itself to have defrauded students. Remarkably, instead of helping the students that were defrauded, the Department has chosen to exacerbate their harm by initiating coercive collection tactics against them, including seizing their tax refunds. The lawsuit demands an end to this illegal debt collection and a return of the funds that have been wrongfully seized.

“For nearly three years, the Department of Education has known that MSB and Globe lied to their students,” said NSLDN Counsel Robyn Bitner. “It is absolutely unacceptable that, instead of discharging their student loans, the Department has instead chosen to go after their income. These students deserve better.”

The student bringing the claims on behalf of the larger class is Tamara Blanchette, who attended the Minnesota School of Business from 2009 to 2011. Ms. Blanchette enrolled in MSB’s associate degree program in criminal justice to become a probation officer. The school’s staff assured her that this degree would allow her to obtain that kind of job in Minnesota, so she enrolled and borrowed more than $23,000 to cover her attendance. When she was unable to complete her degree and later defaulted on her loan payments, the Department subjected Ms. Blanchette to coercive collection tactics, including seizing her tax refunds.

In 2016, the Minnesota District Court found that MSB and Globe, a school owned by the same family, had defrauded students by marketing their criminal justice program as a path to becoming a police or probation officer. In fact, the schools lacked the necessary programmatic and regional accreditation for students to become police officers and failed to inform students that its two-year associate degree program did not meet the requirements for becoming a probation officer. The court proceedings featured sworn testimony and written affidavits from nearly 200 former students who were deceived by the schools, including Ms. Blanchette.

Citing the state court’s findings of fraud, the Department issued recertification denials for both schools, making them ineligible to receive federal student aid funds. Like the state court, the Department found that MSB and Globe “committed fraud,” including substantial misrepresentations about the criminal justice program and transferability of credits. At the time of the trial, the schools had roughly 3,000 students enrolled, with approximately 28,000 enrolled from 2009 to 2015. The schools subsequently ceased operations and shut down or sold their campuses.

Despite the state court’s ruling and its own findings of fraud, the Department is illegally seizing tax refunds of former MSB and Globe students that it knows were defrauded. In addition, the Department failed to notify Ms. Blanchette and her fellow students that they can challenge their debt by asserting a defense against repayment, violating their due process rights under the Constitution.

The lawsuit asks the court to bar the Department from further collection on the loans of the MSB and Globe students who were defrauded, and to order the return of the collection fees and costs the Department has imposed. Those fees are substantial, totaling nearly $6,000 for Ms. Blanchette alone.

The suit was filed June 18 in U.S. District Court for the District of Columbia. The complaint is available here.

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The National Student Legal Defense Network (NSLDN) is a non-partisan, non-profit 501(c)(3) organization that works, through litigation and advocacy, to advance students’ rights to educational opportunity and to ensure that higher education provides a launching point for economic mobility. 

Tags   Litigation