Lawsuit filed over loans tied to defunct beauty school with former Meriden location

Lawsuit filed over loans tied to defunct beauty school with former Meriden location

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Two consumer and legal advocacy groups have filed a lawsuit against the U.S. Department of Education and Secretary Betsy DeVos on behalf of three former Marinello Beauty School students.  

The Legal Aid Foundation of California and the National Consumer Law Center filed this week in federal court over the education department’s refusal to discharge loans of students defrauded by the beauty school.

Marinello closed all 50 campuses, including one in Meriden, in February 2016 after the federal government discovered Marinello had partnered with a private school to provide false high school diplomas. The diplomas were needed to allow the students to obtain financial aid and federal loans to attend Marinello. Additionally, after graduating, the students discovered their Marinello educations were worthless.

“The school had failed to teach them the most basic haircutting skills necessary to maintain employment as cosmetologists,” according to a statement announcing the lawsuit. 

The education department barred five Marinello campuses from receiving federal financial aid, triggering the closure of all 56 Marinello campuses.

According to the lawsuit, the education department had determined the school engaged in fraud, but it refused to discharge students’ federal loans —in conflict with a discharge mandated in the federal Higher Education Act.

In addition, the students are challenging the department’s delays of an updated discharge regulation that would have clarified students’ rights.  The regulation was to go into effect on July 1, 2017, but was shelved by the department until July 1, 2018, and the department is seeking further delays, attorneys said.

“The last administration made strides to ensure the pathway remained open,” said Joanne Darcus, an attorney for the National Consumer Law Center. “The Department of Education hasn’t done their part in helping students get what they are entitled to.”

The education department's plan to provide only partial loan forgiveness to some students defrauded by for-profit colleges could reduce overall payments by about 60 percent, according to a preliminary analysis obtained by the Associated Press on Jan. 30.

The agency announced in December that it was discontinuing the Obama Administration's practice of fully wiping out the loans of students deceived by the now-defunct Corinthian Colleges under the borrower defense rule.

The department said some students will now be getting only partial loan forgiveness to make the process fair and protect taxpayers from excessive costs. The agency will look at average income for specific programs to determine if the loans should be forgiven fully or partially, according to the AP.

Last year DeVos froze two Obama-era rules that were meant to put additional checks on for-profit schools. Critics point to the Trump Administration's ties with the for-profit sector and accuse the department of protecting industry interests, but DeVos says the Obama-era rules were too broad and could be misused at taxpayers' expense.

After Marinello’s closure, the state Office of Higher Education obtained academic transcripts and other student records from the 11 schools in the state. State officials held workshops for the 467 students impacted by the closure to discuss transfer options and how to discharge their federal loans and request tuition refunds. 

Representatives from the Office of Higher Education could not be reached for comment. 

Darcus, of the National Consumer Law Center, said she knows there are more Marinello plaintiffs seeking relief from student debt who have not applied. She encouraged them to do so before it’s too late.


Twitter: @Cconnbiz


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