Fighting Fraudulent Student Debt, One Bad Actor at a Time

PPSL recently became independent from Harvard Law School after a decade. What do you hope to gain from this new independent structure?

PPSL started 10 years ago as a small legal clinic at the Legal Services Center of Harvard Law School and has evolved so much, particularly since our expansion six years ago. Although we started off with a focus on for-profit colleges, we’ve come to a point where our cases seek to address predatory practices in higher education as a whole. 

Being associated with a higher education institution had many benefits, and it was incredibly helpful to us in our formative years; however, we hope that by becoming an independent organization we will have greater flexibility to pursue our mission to best serve the needs of our clients.

How do you identify your clients and bring them together toward litigation?

We have a great community of partners whom we continue to rely upon to help identify our clients and bring people together. Unfortunately, there are so many people who are struggling in the face of predatory lending in higher education, but there are also a lot of people dedicated to making sure there is accountability.

The issue of predatory actors in higher education has really broken through public consciousness, and we’re proud that our litigation has played a key part in this. The momentum builds on itself when we are able to highlight the voices of our clients, especially when we are able to do so through a high-profile, long-term case like the one we brought on behalf of former ITT students, or the cases on behalf of former Corinthian College students that delivered for over 500,000 of our clients. At this stage in our work, we have built a track record for our clients, and we’re incredibly proud of that.

What is the most valuable thing that Congress can do to protect students from predatory lending practices?

Make the Higher Education Act deliver on its promise and its purpose. 

In terms of accountability, the tools are all there right now, they just need to be used. I would also add that, like with any regulatory policy, the more we leave these tools to the discretion of the Department of Education, the greater the risk of interruption and variance from administration to administration. 

Congress also needs to be more explicit in enforcing its mandate. For example, schools that leave their students with too much debt beyond their ability to repay should not be able to participate in the program and receive Title IV money. We have to change the system that is forcing students to take out these exorbitant loans in the first place, particularly in light of President Biden’s recent debt cancellation announcement.

We also need to make the loan termination process automatic, whether it is because a school commits misconduct, it settles a case with an attorney general, it is on probation by its accreditor, or it does not have the financial resources to continue operating and delivering the education that it is promising students. Litigation is a powerful tool, but it should be a tool of last resort. 

What do you think of the proposal for the Department of Education’s negotiated rulemaking to make lenders more accountable and better protect students from predatory lending?

In terms of borrower defense, I think it is probably the strongest rule we have seen proposed. The whole system is delegitimized if wrongdoing is ignored and debts are collected even when they are the product of fraud. We need a strong borrower defense rule because it is the right thing. You cannot let people be indebted for a product that promises to be one thing, but fails to deliver on its promises. 

At the same time, when we need to resort to a rule like this through the administrative process, it indicates there has been a larger failure in the system. This is not a front-end solution. Unless you can ensure that there is accountability at some point in the cycle of predatory student lending, things will continue to be swept under the rug. 

In many ways, borrower defense is the thing that is actually keeping all of the actors in the system honest. By itself, it is not going to solve the problems, but it does expose the need for solutions. That is very powerful and important. 

Have there been any instances where the rules have changed while you were in the process of litigation? 

We had a lawsuit, Pratt vs. Cardona that specifically challenged the illegal formula the Department of Education used under former Secretary [Betsy] DeVos to determine loan cancellation for defrauded students, commonly known as ​“partial relief.” The formula was based on what students were earning. For some programs, a student would need to be making negative income to have their debt cancelled. It was clearly designed to drastically reduce any amount of cancellation. 

There were actually scenarios where some of our clients, including some of those who went to ITT Tech, would get nonsensical notifications from the Education Department that said, ​“Congratulations, you have established borrower defense. And as a result of that, zero percent of your loan will be cancelled.” 

We brought a lawsuit against that policy. We were in the process of litigating it when the Biden administration retracted the rule and decreed that loans should be 100 percent cancelled when borrower defense claims are established. In doing so, the administration adopted a lot of the arguments we had made about why the previous rule was irrational, which was nice to see.

This can be stressful work. What is most fulfilling about it?

Sometimes it’s impossible to really absorb the impact of releasing people from fraudulent debt. Recently, it was announced that $3.9 billion of ITT debt will be cancelled, which affects 200,000 people. We represented all these people in ITT’s bankruptcy and began the work over five years ago. It’s hard to process the magnitude of impact on individual lives and the way it will positively impact families, and even generations to come. 

Being able to hear people say, ​“I was in such a hopeless place, now I am going to be able to do something for my family that I never thought possible,” is hands down the most fulfilling thing that I could ever imagine being able to accomplish as a lawyer. It is what made me want to become one in the first place. I think being able to make people’s lives better in this concrete way is so rewarding. It is the reason that everyone on our team continues to get up and fight the good fight every day.