A federal court in California ruled Friday that the Education Department violated privacy laws when it used the Social Security Administration (SSA) to help it analyze loan forgiveness for students defrauded by the for-profit Corinthian Colleges.
The district court ordered the department to cease debt collection from the defrauded students and to stop seeking SSA’s services for the practice, according to The Associated Press.
The Education Department began the practice last year when Secretary Betsy DeVos announced that former students of the now-shuttered schools would have only part of their federal loans forgiven.
The court said it wants to hear more from Corinthian Colleges and those who have filed a class-action suit against the for-profit chain to determine if it will compel the department to return the full loan forgiveness, the AP reported.
About 100,000 students have ongoing claims for full loan forgiveness through the Education Department.
“We’re encouraged that the court recognized the Secretary’s discretion to establish a borrower defense claims process that determines compensation based on harm incurred by the borrower,” said Education Department press secretary Liz Hill in a statement to The Hill.
“In implementing the Department’s programs, we are mindful of the Privacy Act’s requirements, and we will carefully review the court’s decision as we assess next steps.”
The group representing the defrauded students, Harvard University’s Project on Predatory Student Lending, hailed Friday’s court decision as a victory.
“The notion that students got anything other than negative value from Corinthian has been roundly disproved by student experience and the judgment of employers and the legitimate higher education sector,” director Toby Merill said.
The state of California sued DeVos last year over the decision to repay only some of the loans, calling it an “unconscionable” choice by the department.
“What Secretary DeVos is doing is unconscionable,” California Attorney General Xavier Becerra said in a statement.
“It is hard to believe that we are forced to sue the Department of Education to compel Secretary DeVos to carry out the Department’s legal duty and help these students rebuild their lives,” he added.
This story was updated on May 29th at 4:41 p.m.