MIL-OSI USA: Attorney General Bonta Petitions Department of Education for Student Loan Relief on Behalf of Californians Defrauded by Education Corp. of America

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Source: US State of California

OAKLAND – California Attorney General Rob Bonta today, as part of a multistate coalition, submitted a “borrower defense” application to the U.S. Department of Education (ED) on behalf of California students defrauded by Education Corp. of America (ECA). ECA operated a number of predatory for-profit schools in California before it abruptly shut its doors in December 2018. In today’s application, the attorneys general seek full relief for borrowers defrauded by ECA between June 2016 and December 2018, including a full discharge of their federal student loans and a refund for money already paid toward their loans. More than 13,000 Californians could receive an estimated $100 million in student loan debt relief if ED grants the relief sought in this application.

“We are petitioning the Department of Education on behalf of the more than 13,000 Californians who were left with mounting debt and broken promises when Education Corp of America abruptly shut its doors,” said Attorney General Bonta. “Granting this application should be a no-brainer. These students’ only mistake was trusting Education Corps of America to help them achieve their dreams. They deserve relief from their student loan debt, and the Department of Education has the ability to make that happen.”

ECA was a privately held company that operated a number of predatory for-profit schools in California and across the United States, including a Golf Academy of America campus in San Diego and Brightwood College campuses in Bakersfield, Chula Vista, Fresno, Modesto, North Hollywood, Palm Springs, Riverside, Sacramento, San Diego, and Vista. All ECA schools abruptly closed down in December 2018 after the company lost accreditation.

Borrower defense is the process by which current and former students can seek relief on their federal student loans when they have been defrauded by their school. Borrowers can apply for relief themselves and under ED regulations, state attorneys general and others can submit applications on behalf of defrauded borrowers. Today’s application continues the Attorney General’s efforts to protect student loan borrowers and to utilize borrower defense to secure student loan debt relief for financially vulnerable California borrowers. 

In the application, the attorneys general argue that ECA’s conduct meets all of the requirements for borrowers to receive relief:

  • Between June 2016 and ECA’s closure in December 2018, ECA consistently misled students about its unstable and uncertain accreditation status, financial position, and quality of education;
  • ECA failed to fulfill its contractual obligations to provide career counseling and other career services to students after it abruptly closed; and
  • Up until the day it closed, ECA misleadingly promised enrolling students that they would be able to complete a full term of study and eventually earn a degree. 

Attorney General Bonta is committed to holding predatory actors accountable and protecting California students. Earlier this year, Attorney General Bonta obtained a judgment against Ashford University and its parent company Zovio for defrauding California students. Attorney General Bonta also secured a multistate settlement against Navient, resolving allegations of misconduct in the servicing and collection of federal student loans. Previously, Attorney General Bonta announced the successful resolution of litigation against ED after the Biden Administration committed to fixing the broken Public Service Loan Forgiveness programs. 

In 2015, the California Attorney General’s Office worked closely with ED to implement the first-ever borrower-defense process, which led to tens of thousands of borrowers receiving full relief from their federal loans taken out to attend Corinthian Colleges. Attorney General Bonta is involved in several ongoing lawsuits relating to ED’s failure to grant borrower-defense applications that have been pending for years and for ED’s illegal issuance under the Trump Administration of borrower-defense regulations designed to thwart access to relief.

Attorney General Bonta joins the attorneys general of Pennsylvania, Maryland, Colorado, Virginia, and Alabama in submitting the application.

A copy of the borrower defense application can be found here.

MIL OSI USA News