The scenario is all too familiar: A for-profit college targets vulnerable working people with promises of a degree that will translate into career advancement. To the targeted individual — most often someone of lower income, a veteran, or a person of color — this seems a worthwhile investment, with student loans as a necessary evil. Yet the education ultimately falls short, the jobs never materialize, and the degree proves essentially worthless — a result that doesn’t become clear until a lifetime’s worth of government-backed debt has piled up.
Five years ago, the WilmerHale Legal Services Center at Harvard Law School launched the Project on Predatory Student Lending, the first major legal effort on behalf of defrauded students. Since 2016, the Project has represented more than a million borrowers and brought about the cancellation of more than $2.5 billion in fraudulent debts. Clinical students join the project’s staff to litigate cases on behalf of clients, in partnership with community-based and advocacy organizations.
Project founder Toby Merrill ’11 was appointed last month as assistant general counsel at the U.S. Department of Education, a move that was applauded by Sen. Elizabeth Warren among many others. The project now continues under the leadership of its director of litigation, HLS Lecturer on Law Eileen Connor, who has been part of the project since 2016.
The project has done individual casework as well as larger class action suits, with tens of thousands of plaintiffs. Connor and Merrill both found the problem of predatory student lending to be related to their previous work — Connor in civil legal services, Merrill investigating subprime mortgage lending. Both saw the connection between for-profit colleges and government lending practices, in a system that benefits the institution over the individual. In particular, the GI Bill and the first Higher Education Act created a system in which some $30 billion a year of federally-funded student loans have flowed into for-profit colleges.
“It was something that kept coming up in the backgrounds of my clients,” Connor said recently. “The incentives are so misaligned and the regulation was clearly inadequate. Once an institution can cross the threshold where they have access to this spigot of federal funds, it’s essentially risk-free to them: They get to keep the money even if the student drops out, can’t get a job, or can’t get licensed because the education was so inadequate — the individual is still on the hook for that debt. And I saw a completely dispassionate, disinterested government continuing to collect the debts as if nothing had gone wrong at all. That was the situation that we went in hoping to upend.”
Connor said that there had been much smaller legal efforts on behalf of defrauded students in the past, going back to the days of correspondence schools targeting veterans for their military benefits. But, she said, “It’s like a cycle of abuse: There’s some exposure and crackdown, then it starts happening all over again. Our approach is different in that we aren’t operating with the constraints of a geographically-limited legal aid office. We said that what we wanted to do was bring actions against the regulators and the private actors, on a scale that would really have some impact. That’s why most of our cases have been class actions, and we’ve represented more than a million students through our litigation.”
Indeed, the first major effort — representing two Massachusetts students who’d attended Everest Institute, a local part of the now-defunct Corinthian Colleges chain — set off a series of events that spanned three presidential administrations and wasn’t finally resolved until July of this year. Though the school was found to have defrauded students with inflated job-placement statistics, the government had attempted to take the two plaintiffs’ earned income tax credits as loan payment. In response, the Harvard group invoked the provision of borrower defense, which allows federal borrowers to seek relief when an institution has been found to engage in misconduct.
“To us it was not OK for the government to take their tax refunds, when they knew full well that the loans were not valid; they were part of documented consumer fraud,” said Connor. “We won that case, and after that we had to file a second one. We said that if it’s true for these two people, it must be true for everyone who went to that school.” A second case, representing 7,200 students of the same Massachusetts college, was also decided in the students’ favor. This in turn led to a nationwide groundswell of students who’d had the same experience with other colleges in the Corinthian chain.
But their progress was stalemated by Betsy DeVos’ Department of Education under former President Donald Trump, which Connor says did everything possible to undermine it. “After a pause of almost a year, they decided to [renege] on the idea that full cancellation was in order. So now it would vary by individual: Some people would get full cancellation, some just ten percent. People whose earnings were below the poverty line were being told they’d gotten enough value out of their program to justify repaying the loan. The stories we were hearing were so awful — stories like ‘I lost my home, my son died, and now I can’t afford to buy an urn for his ashes.’ You can’t put a dollar value on this kind of pain, and it was so callously inflicted.”
Last year a new case, Sweet v. Cardona (originally Sweet v. DeVos in 2019) was filed on behalf of thousands of students now being denied relief. A fairness hearing was held via Zoom in October, a moment that Senior Attorney Rebecca Ellis remembers as one of the most dramatic in her work with the project. A 2012 Harvard Law graduate, Ellis joined the project from the Boston office of Ropes & Gray LLP, where she was a senior associate in the Litigation and Enforcement Department.
“In a normal class action case, you’re not going to see hundreds of class members show up, wanting to give their opinions at the fairness hearing,” Ellis said. “It would be a huge burden to travel. The court selected 14 plaintiffs to speak on behalf of the class, but about five hundred joined the hearing through Zoom. They communicated with each other, and with the court, through the Zoom chat function. One of the people who spoke ended up reading aloud the form letter she had received, and you could see in the chat, ‘That’s exactly what mine said.’ It was really a remarkable moment of being able to put before the court the human face of this class, and the people who were suffering under the [Department of Education’s] policies. We often say at the project that our clients are their own best advocates; it’s our job to elevate their voices and make them heard.”
Although the case was put on temporary hold for the court to process the meeting, the project continued working, gathering internal memoranda that were written to justify the denials. “They really showed a blatant disregard for evidence of misrepresentation,” Ellis said. “It seemed to be a policy designed to find a way to say no to these applicants.”
While the Sweet case is still ongoing, last month brought the project a victory in a related case, Vara v. Cardona, in which the Department of Education dropped its DeVos-era attempt to reinstate debts of the 7,200 Massachusetts Everest students. Also in July, the department announced that it would approve borrower defense applications from 1,800 students who had attended a different group of for-profit colleges. These events, along with Merrill’s recent appointment, would seem to point to a friendlier climate for predatory lending victims. But Connor emphasizes that there is still much work to be done.
“Broadly speaking, I’d say it’s a really good sign that the administration has brought out people in general, and Toby specifically, to fill these important roles,” she said. “That’s positive overall, but it’s not something that can be turned around overnight. Even if there is a strong mandate from the government, it has to be effectuated by a department made up of people who have a deep institutional knowledge and a commitment to doing things a certain way. I’m seeing good signals in terms of a desire and the priorities of this administration — I just think that the execution remains to be seen.”
As for the project’s work, Connor says “I like to think we’re making progress. I am so pleased and thankful for each and every person who’s gotten some of their student loan debt canceled. I think that my true desire is that this doesn’t happen to anybody else in the future. And one way to make sure that that doesn’t happen is to continually hold people who are responsible accountable for what they’re doing — and what they’re not doing in the ways that they’re letting people down.”
For students who’ve worked on the project, it became an important springboard to their work after graduation. Jessica Ranucci ’16 joined as a clinical student in her 2L year, and was awarded a fellowship to litigate on behalf of debt collection defendants in New York City civil court with the New York Legal Assistance Group’s Special Litigation Unit, where she was recently name a senior staff attorney.
“There is no way I would be doing this work without the clinic,” she said. “My work now is directly related both substantively, and to how one thinks about being a lawyer. In my current job I do in-house litigation on behalf of low-income New Yorkers across all sorts of issue areas, but with a particular focus on student loans and consumer debt — and so it’s very similar to the work the project has been doing. The clinic is really where I learned about how loans work, how debt collection court works, what the experience is for clients, how to advise them about their federal student loan rights. Those are skills I use in my job all the time, every day.”
“The other piece,” Ranucci adds, “is thinking on a higher level about systemic problems: What are the policy problems, what are the legal problems, and how can you challenge that in a systemic way? I’ve done some lawsuits recently that are about federal student loans, very similar to the work the project is doing. But even when I’ve done a number of consumer debt lawsuits, which aren’t strictly student loan-related, they still build on the basics that I learned in the clinic.”
She also credits her professors for their influence on her career. “The experience of doing this work as a clinical student was very important; different than if I’d done it after law school. It really shaped my law school experience, and it left me with the sense that this was exactly what I wanted to do.” Ranucci said that Connor and Merrill’s work as litigators tends to overshadow their considerable accomplishments as teachers. “They’re also such good litigators and people tend to focus on that. But I’ve seen how hard they work and how important the students are to them.”
Related Video: Five years of impact
In 2016, the Project on Predatory Student Lending launched a first-of-its-kind legal fight against the predatory for-profit college industry and the harm it causes to students and communities. Since that time, the project has grown to represent more than one million borrowers and its litigation has directly resulted in the cancellation of more than $2 billion in fraudulent student debts.