Cottrell v. U.S. Dep't of Educ.

430 F.Supp.3d 1287

Michelle COTTRELL, Plaintiff,

v.UNITED STATES DEPARTMENT OF EDUCATION, Defendant.

Case No. 3:18-cv-1614-MJF

United States District Court, N.D. Florida, Pensacola Division.

Signed December 30, 2019

Michelle Cottrell, Pace, FL, pro se.

Herbert Stanley Lindsey, US Attorney, Tallahassee, FL, for Defendant.

ORDER

Michael J. Frank, United States Magistrate Judge

Plaintiff Michelle Cottrell accrued over $150,000 in student-loan debt in pursuit of graduate degrees. Cottrell brought this action in an attempt to discharge that debt based on her inability to obtain a salary commensurate with the debt she incurred—a circumstance she characterizes as an "inability to benefit" from the education she received. Because Cottrell does not have a private right of action for discharge of her student-loan debt, and because she has not shown that there is a final agency action that is subject to judicial review, this court must dismiss this action without prejudice.¹

I. Background

A. Statutory and Regulatory Structure of Student Loan Discharges

The Department of Education ("DOE") is an executive-branch agency that Congress created in 1979 through the Department of Education Organization Act, Pub. L. No. 96-88, 93 Stat. 668 (1979) (codified at 20 U.S.C. §§ 3401 - 3508 ). The DOE establishes policy for, administers, and coordinates most federal assistance for education. Title IV of the Higher Education Act ("HEA") authorizes the federal government to provide financial assistance to students of higher education. See 20 U.S.C. §§ 1070, et seq. As part of the Federal Family Education Loan Program and William D. Ford Federal Direct Loan Program application process, an educational institution must certify to the DOE that an applicant for an education loan is eligible to receive the loan. See 34 C.F.R. § 682.402(e)(1)(i) ; 34 C.F.R. § 668.32.

To qualify for federal educational financial assistance under either loan program, a student must attend an eligible institution and must have a high school diploma or recognized equivalent. If the student lacks a diploma, the institution must demonstrate the student has an ability to benefit ("ATB") from the education or training that she would receive using the financial aid. 20 U.S.C. § 1091(a), (d). The particulars of how a school must demonstrate that the student has an ATB have changed over the years. A student, however, generally must pass a standardized test to demonstrate an ability to benefit. 20 U.S.C. § 1091(d) ; 34 C.F.R. § 668.32(e).

When a school falsely certifies the applicant's eligibility for a loan, the Secretary of Education must discharge the loan. 20 U.S.C. § 1087(c) ; 34 C.F.R. § 682.402(e)(1)(i)(A) (providing for discharge of loans under Federal Family Education Loan Program); 34 C.F.R. § 685.215(a)(1)(i) (providing for discharge of loans under William D. Ford Federal Direct Loan Program if a school falsely certifies a student's eligibility for a loan). Other circumstances warranting administrative discharge of a loan are death, total and permanent disability, attendance at a school that closes during the borrower's course of study, and unpaid refunds by a school. 20 U.S.C. § 1087 ; see also 34 C.F.R. § 682.402 ; 34 C.F.R. § 685.215.

B. Factual Background

The relevant facts are taken from Cottrell's verified petition, documents attached to her petition, and Cottrell's original Loan Discharge Application. See Gill as Next Friend of K.C.R. v. Judd , 941 F.3d 504, 511 (11th Cir. 2019) ("In deciding whether a complaint states a claim upon which relief may be granted, we normally consider all documents that are attached to the complaint or incorporated into it by reference.").² The court credits as true specific, well-pleaded allegations in Cottrell's petition that either do not appear in an exhibit or that contradict conclusory statements in an exhibit. Gill , 941 F.3d at 514 ("When a complaint contains specific, well-pleaded allegations that either do not appear in the attached exhibit or that contradict conclusory statements in the exhibit, we credit the allegations in the complaint."). When an allegation of the petition is general and conclusory, and an exhibit contradicts the allegation, the information in the exhibit is assumed to be true. Gill , 941 F.3d at 514 ("[W]hen exhibits attached to a complaint contradict the general and conclusory allegations of the pleading, the exhibits govern.").

In August 1991, Cottrell began attending Indiana State University, after graduating from Terre Haute South Vigo High School. (Doc. 1-1 at 8). Cottrell subsequently earned both her Bachelor of Science and Master of Education degrees from Indiana State University on August 14, 1998, and May 9, 2009, respectively. (Doc. 20-1 at 10-11). In May of 2009, Cottrell enrolled in Capella University— located in Minneapolis, Minnesota—in pursuit of a doctoral degree in education. (Doc. 1-1 at 10; Doc. 20-1 at 1). On December 31, 2012, Cottrell earned a post-master's certificate in college teaching from Capella. (Doc. 20-1 at 12). During Cottrell's tenure at Capella, the university increased tuition and modified the coursework and experiential learning requirements for the doctoral degree Cottrell was pursuing. (Doc. 1-1 at 2). In April of 2015, Cottrell ceased attending Capella University without obtaining her doctorate. (Doc. 20-1 at 1, Doc. 1-1 at 10-11).

Cottrell financed her graduate education by obtaining loans from the DOE. On July 7, 2008, while pursuing her Master of Education degree at Indiana State University, Cottrell's first Federal Stafford Loan was disbursed. (Doc. 1-1 at 13-14). From 2008 through May 19, 2015, approximately twenty-two loans were drawn on Cottrell's account, leaving Cottrell with a balance in excess of $150,000. (Doc. 1-1 at 13-14).³ Cottrell is currently on an Income-Based Repayment Plan that requires no current payment. (Doc. 1-1 at 2, 13-15; Doc. 22 at 1). Cottrell also has not defaulted on her loans. (Id. ).

On August 18, 2017, Cottrell submitted a Loan Discharge Application: False Certification (Ability to Benefit) (OMB No. 1845-0058) to her student loan servicing agency, FedLoan.org. (Doc. 20-1 at 1). In this application to discharge her student-loan debt, Cottrell asserted that: (1) she did not have a high school diploma or General Education Development ("GED") credential while enrolled at Indiana State University and Capella University; (2) she was not given an ability to benefit test; (3) she did not complete a developmental or remedial program at either school; and (4) she did not complete six credits of coursework before a loan had been disbursed. (Doc. 20-1 at 1-2). Cottrell did not answer the question on the application form that required her to state whether she received a GED before completing the program. (Doc. 20-1 at 1). These facts, according to Cottrell, warranted discharge of her student-loan debt.

On August 31, 2017, the loan servicing agency responded to Cottrell's application by advising her that she was "not eligible" for a loan discharge based on a false certification. (Doc. 20-2). The loan servicing agency instructed Cottrell to: (1) complete a separate application for each school from which she sought a discharge; (2) make sure she answered all the questions on the form; (3) provide proof that she did not have a high school diploma or GED prior to enrolling; (4) provide proof that she was not given an ability to benefit test; and (5) provide evidence that she did not complete 6 credit hours prior to the loan disbursement. (Doc 20-2). Cottrell alleges that eventually the loan servicing agency recommended that she seek relief in court rather than submit the additional applications. (Doc. 22 at 2). Specifically, Cottrell alleges:

I have already filled out available other public ways to have the debt discharged but they have specific things like you need to not have graduated from high school, etc. attached to the forms like the Capella example; this is why the FedLOan.org suggested I seek relief through a court since all the specifics are different for each person and my situation is not likely that I would be so unlucky to not have a salaried job and be at least in a comfortable way of life with a means to pay for this length of time.

(Doc. 22 at 2).

On June 14, 2018, Cottrell filed a "Petition For An Order to Discharge School Loan Debt" in the Circuit Court for the First Judicial Circuit in Escambia County, Florida. (Doc. 1-1). Her petition names the DOE as the Defendant and is a mere three pages in length. It does not cite a single statute or regulation and fails to state what law purportedly affords her the right to have her student loan debt discharged. On August 6, 2018, the DOE removed this action to this court. (Doc. 1). The DOE subsequently moved to dismiss this action for failure to state a claim on which relief can be granted. (Doc. 20).

II. Standard

A motion to dismiss for failure to state a claim is governed by Rule 12(b)(6) of the Federal Rules of Civil Procedure. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S. Ct. 1955, 1955, 167 L.Ed.2d 929 (2007) ). A claim is plausible on its face where "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly , 550 U.S. at 556, 127 S. Ct. at 1955 ). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id.

Determining whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal , 556 U.S. at...