Suit Challenges Denial of Education Loans to Unauthorized Immigrants

Student loan debt is not something most people covet, but for Mitzie Perez, a 25-year-old university student in California, borrowing money to cover her tuition bills would be a boon.

Ms. Perez is an undocumented immigrant who was illegally brought to the United States from Guatemala in 1997, when she was 5 years old. She was sheltered from deportation by the Deferred Action for Childhood Arrivals program, known as DACA, an Obama-era initiative that grants some protections to those who were brought here as children.

But Ms. Perez, a junior majoring in gender and sexuality studies at the University of California, Riverside, has never been able to do something that most college students take for granted: obtain a loan to finance her studies. She sued a lender, Wells Fargo, that turned her down, claiming that its policy of denying applicants because of their immigration status is illegal.

The lawsuit, which seeks class-action status, is one of the first to challenge common industry policies that make it difficult for undocumented students to finance higher education. The case was filed in San Francisco federal court, with the California League of United Latin American Citizens participating as a plaintiff.

“Our position is that banks are supposed to make these kinds of loan decisions based on an assessment of risk,” said Ossai Miazad, a lawyer who is representing Ms. Perez. “To put that aside completely and deny people based on their immigration status is discriminatory.”

Most student borrowers rely on loans backed by the federal government, but undocumented students are not eligible for federal loans. Those wishing to borrow must turn to private loans, which generally carry fewer protections — and, often, higher rates — than federal loans.

No laws prohibit lenders from making loans to undocumented borrowers who possess identifying information like a Social Security number, which Ms. Perez has. Still, this is an area where banks tread very lightly.

Among five of the nation’s largest issuers of private student loans, two — Discover Bank and Sallie Mae — said they made loans to undocumented students under some circumstances.

Discover “does not differentiate between borrowers based on DACA status, and would loan to such individuals if they were otherwise qualified,” said Robert Weiss, a company spokesman.

Sallie Mae will make loans to qualifying students enrolled in DACA if they have a co-signer who is a United States citizen or permanent resident, said Rick Castellano, a company spokesman.

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The fate of the DACA program and the 750,000 young immigrants in it is one of the thorniest immigration issues facing President Trump.

Created in 2012 by President Barack Obama through an executive action, the program has allowed hundreds of thousands of people who were brought here as children to obtain jobs, pursue college degrees and live openly in the country where they were raised. Many are worried that they will lose those protections under Mr. Trump, who has moved to upend America’s immigration policies.

Ms. Perez said she was deeply anxious about the future of the DACA program and how Mr. Trump’s actions would affect her and her family. But she also has immediate concerns, like how to pay for her next few months of schooling.

For the moment, she works as a community organizer and uses her income and credit card loans to finance her education.

“I’m considering having to drop out or cut back, because I can’t make ends meet,” Ms. Perez said.

Thomas A. Saenz, the president of the Mexican American Legal Defense and Educational Fund, which helped Ms. Perez bring her lawsuit, said expanding access to student loans was a critical issue for thousands of people.

“We are hoping that businesses will understand that this type of discrimination is not permissible — regardless of how folks may erroneously conclude that the rhetoric of the new administration may change things,” Mr. Saenz said. “It doesn’t change what anti-discrimination laws provide.”