December 26, 2012
Stop Handing Out Student Loans Like Candy, Or Else You’ll Get Sued Like Sallie Mae
You may recall that back in 2011, before all of the law school litigation came into being, the California Culinary Academy (CCA) was hit with a multi-million dollar class action lawsuit filed by its graduates. The allegations contained therein — misleading job data, high tuition, and difficulty finding jobs after graduation — were very, very similar to those found in the law school lawsuits we revel in covering. Unlike the law schools that are currently under fire, the CCA offered to settle the case for $40 million, and that settlement was approved and entered as a final judgment this summer.
While the only law school lawsuit that’s come anywhere close to CCA’s status has been Alaburda v. Thomas Jefferson School of Law — currently in discovery, where all sorts of interesting stuff has been unearthed — law school plaintiffs may have another avenue to explore, thanks to yet another lawsuit that’s been filed by CCA graduates. This time, the bitter would-be cooks are out for blood against the very company that funded their failed culinary education.
That’s right, Sallie Mae is being sued for handing out private loans with “credit-card interest rates” like candy — really expensive, life-ruining candy. When will law school graduates do the same thing?
Courthouse News Service has the details on the lawsuit that’s been filed against Sallie Mae:
According to the new complaint: “Sallie Mae misled plaintiffs and committed other unlawful conduct of its own, causing plaintiffs to take out enormous loans with credit-card interest rates, when Sallie Mae knew that these students had a relatively small likelihood of being able to repay the loans in full. Plaintiffs now seek to get their lives back on track by having Sallie Mae bear its fair share of the losses.”
Hmm, this sounds awfully familiar, except law school graduates are dealing with much more student-loan debt than culinary school graduates. How many recent graduates who claim they were snookered into attending law school with false promises of future employment will be able to pay off, or even pay down, their unfathomable amounts of debt? The total probably matches the number of people who actually believe that Cooley Law is the second-best law school in all the land. Here’s more from the suit:
“Plaintiffs had no idea that attending CCA was an economically irrational act. Plaintiffs did not know that a CCA education has little or no value. Nor did they understand that at no relevant time has there been a job market for CCA graduates that pays sufficient wages to enable graduates to pay down the substantial debt they must incur to finance CCA’s exorbitant education.”
Jeez, next thing you know, some judge is going to come out and proclaim that these CCA students were “sophisticated consumers,” while another will tell them that CCA’s employment statistics were “so vague and incomplete as to be meaningless and could not reasonably be relied upon,” and Sallie Mae will have little else to do but cackle gleefully as it rolls around in its $234 billion worth of student loans.
The suit against Sallie Mae alleges that the “harm to the plaintiffs has been catastrophic.” Many law school graduates would wholeheartedly agree with that sentiment. But who will be brave enough to file suit? Only time will tell, but perhaps it’s time for some lawyers to take up the fight against student loan companies on behalf of our nation’s many woefully indebted law school graduates.
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