The Project on Predatory Student Lending at Harvard Law School is suing the Justice Department for withholding documents that could help for-profit college students get their federal education loans canceled.
The lawsuit stems from a 2015 settlement between the Justice Department and Education Management Corp., the operator of for-profit schools Art Institutes, Argosy University, Brown Mackie College and South University. The company agreed to pay $95.5 million to resolve allegations that it paid employees based on student enrollment in violation of a federal ban on incentive compensation at schools in the federal financial aid programs.
Although a coalition of states involved in the deal got Education Management to forgive $103 million in outstanding student balances, the settlement did nothing to grant federal loan cancellation. As a result, people who attended Education Management schools have been filing “borrower defense to repayment” claims, which wipe away federal debt when schools use illegal or deceptive tactics to persuade students to borrow money for college.