An Aurora woman who attended a “predatory for-profit” college in the Loop filed a proposed class-action lawsuit Wednesday on behalf of student loan borrowers who were shut out of getting their loans discharged, following a 2022 settlement against loan servicer Navient Corp.
Amanda Luciano, 38, racked up more than $138,000 in debt and has paid off about $52,000. The lawsuit says Navient should have erased her loans because she attended a “predatory for-profit” school. Instead, the company refused and wouldn’t explain why.
Luciano filed the lawsuit against Navient and its subsidiary, Navient Solutions, in Cook County Circuit Court, saying the servicer fraudulently and unfairly denied her request to have her loans discharged. Her complaint seeks class-action status for other Illinois borrowers who also received “boilerplate” denials from Navient.
Navient declined to comment.
Luciano, the first in her family to go to college, attended the now-defunct International Academy of Design and Technology from 2006 to 2008. She studied fashion merchandising after she had completed two years of community college.
IADT was owned by Career Education Corp., whose “widespread fraud, misrepresentation and abuse” have been documented in legislative and law enforcement inquiries, the lawsuit says. Career Education has settled numerous lawsuits with government agencies, including a 2019 settlement with 49 states that had accused it of misrepresenting costs, transferability of credits and employment prospects.
Luciano graduated with a bachelor’s degree that she says was “worthless” and did not lead to the job opportunities touted in the school’s marketing materials. She told the Sun-Times the classes were “not great” and mostly led by adjunct teachers, and the promised career services didn’t materialize.
“They made it sound very exciting,” Luciano said. “They made it sound like there were so many jobs available to us when we graduate.”
According to the lawsuit, an IADT financial counselor steered Luciano to take out private loans with variable interest rates even though she was eligible for federal student loans, which have better consumer protections and typically lower interest rates.
The lawsuit contends that private so-called “subprime” loans were pushed because the school needed to prove that at least 10% of its revenue was from private sources so it could qualify for lucrative federal education money.
The counselor told her not to worry because “you’ll be making more than enough money once you graduate to pay this off,” the suit says.
Luciano says she applied to jobs for three years after graduation “trying to find something that could help pay off these loans.” The best she found was an entry-level retail job that didn’t require a college degree.
Luciano’s three private loans totaled $61,214. She has already paid $52,035, but the remaining balance has ballooned to more than $86,000 because of fees and interest.
She’s diligently made payments to not wreck her credit, but her efforts seem to have backfired. The 2022 settlement won by Illinois and 38 other states against Navient wiped out debt only for borrowers who were delinquent on their payments for more than seven months.
Navient created a process for other borrowers like Luciano to apply to have their debts discharged due to misconduct committed by their schools.
But the complaint says, “Defendants have mass-denied applications with cursory and boilerplate language. Where borrowers have asked for clarification, Defendants have refused, insisting their process is proprietary and confidential.”
Luciano said over the past year she applied three times to have her loans discharged and was denied.
She draws a distinction between blanket student loan forgiveness and this loan discharge process.
“Really, it’s fraud. We should not have to continue to pay on these worthless degrees,” she says.
Daniel Schneider, supervisory attorney at Legal Action Chicago, which is representing Luciano along with the Project on Predatory Student Lending, says it’s a “cruel irony” that Luciano was left out of the Navient settlement.
“Because she tried to pay her bills, she was left out of relief,” Schneider says.
Illinois was one of the first states to sue Navient in 2017. It had been one of the largest servicers of student debt. The company didn’t admit to any wrongdoing as part of its settlement, which included $1.85 billion to resolve allegations of widespread unfair and deceptive practices. Of that, $1.7 billion in subprime private student loan balances was canceled for more than 66,000 borrowers nationwide.
Luciano went back to school again in 2011 to become a preschool teacher. She’s now raising two children, ages 6 and 8, and working two part-time freelance jobs.
The debt from IADT has been hanging over her for more than 16 years.
“It’s always there — it’s in the back of my head,” she says. “I wasted so much time and money.”