Court rules against feds in student loans case

WASHINGTON — A federal court has ruled that the Education Department violated privacy laws of students defrauded by the Corinthian for-profit college chain.

In a break with Obama policy, Education Secretary Betsy DeVos announced in December that some students cheated by the nowdefunct schools would get only a part of their federal student loan forgiven. To determine how much to forgive, the agency analyzes average earnings of graduates from similar programs.

But a California district court ruled late Friday that the department’s use of Social Security Administration data in order to calculate loan forgiveness violates the Privacy Act. The court ordered that the Education Department stop the practice and stop debt collection from students.

The court also said that it needs to hear more from the agency and plaintiffs in the class-action suit to decide whether or not to compel the agency to return to full loan forgiveness. A hearing is scheduled for June 4.

The decision marks an important victory for students challenging the partial loan forgiveness rule.

Toby Merill, director of the Project on Predatory Student Lending at Harvard University, which is representing the students, hailed the decision.

DeVos said the Obama policy left room for potential abuse and unfairly burdened taxpayers who ended up paying for those loans with their taxes.