The Latest From PPSL: New cases, holding servicers accountable, and protecting borrower defense
Summer has been a busy season for us at PPSL, and as we dive into fall, there’s a lot to share. From filing new cases to increased advocacy efforts, we’re mobilizing borrowers and working together to hold the student loan system accountable to borrowers and the law.
New Case: MOHELA’s failure to implement group borrower defense charges
On September 4, PPSL filed our latest class action lawsuit, Maldonado v. MOHELA, on behalf of California borrowers alleging that the federal student loan servicing giant MOHELA failed to implement student loan discharges ordered by the Department of Education. Between April 2022 and May 2024, the Department announced group discharges for former students from six predatory for-profit institutions where there were findings of rampant misconduct: Marinello Schools of Beauty, Corinthian Colleges, ITT Technical Institute, Westwood College, the Art Institute, and Colorado-based campuses of College America. Borrowers were told publicly and directly that they didn’t need to take any action and their loans would be discharged. Instead, as the filing details, MOHELA has failed to take action and refuses to implement the discharges, while borrowers suffer the consequences. Through the lawsuit, borrowers are demanding that their loan discharges be implemented immediately and that MOHELA stop its inaccurate treatment and credit reporting of their accounts. PPSL’s co-counsel in this case are Kemintzer, Barron & Krieg, LLP and Jubilee Legal.
Check out coverage in the Boston Globe, MarketWatch, and American Prospect.
Sweet Relief: Holding ED and servicers accountable on overdue settlement relief
This summer started with Judge William Alsup stating “cancel your vacations” as representatives from the Department of Education, Department of Justice, loan servicers, and PPSL attorneys attended a hearing in Sweet v Cardona. Judge Alsup demanded accountability from the Department of Education and its servicers after their gross mishandling of settlement relief in the $6 billion borrower defense settlement, ordering biweekly in-person meetings with all parties and monthly status hearings to report on progress. At the latest hearing in August, the Department reported that it expected to have settlement relief for the automatic discharge group completed by the extended deadline of August 31, 2024. The next hearing to ensure accountability on these discharges is scheduled for September 26, where we will continue to fight for our clients to ensure they finally receive their overdue settlement relief.
Advocacy: Urging action at ED and debunking myths about borrower defense
Advocates and borrowers have been working together to reinforce the urgent need for the Department of Education to act faster to fulfill its obligations to student borrowers. On August 29, PPSL joined a coalition of 26 organizations, along with nearly 800 individual student loan borrowers who have been harmed, in sending a letter to the Department of Education urging the Department to finish delivering relief on the group discharges it has already announced and promptly issue additional group discharges for borrowers who attended other schools with records of widespread misconduct.
More than 50 members of Congress, led by Senator Elizabeth Warren and Congressman James Clyburn, followed up with a letter to the Department of Education citing our lawsuit against MOHELA, calling the allegations “explosive” and urging the Department to “immediately evaluate whether MOHELA is meeting its contractual obligations as a student loan servicer.” The letter detailed the many issues borrowers have encountered when seeking answers from MOHELA on the implementation of their student loan discharges, from hours-long call wait times to receiving inaccurate and false information.
And in the face of misinformation and baseless attacks on borrower defense, we partnered with TICAS to put out a series of resources that debunk borrower defense myths and call on policymakers to strengthen this essential consumer protection. To catch up on all things BD, share and view the resources here.
This is a critical time for borrowers and we’re working hard to make sure they get the relief they are owed. We can’t do it alone. Thank you for your partnership and support.
