United States v. Cohan

Decision Date01 June 2015
Docket NumberNo. 3:11–cv–0412 (JAM).,3:11–cv–0412 (JAM).
Citation111 F.Supp.3d 166
Parties UNITED STATES of America, Plaintiff, v. Gregory P. COHAN, Defendant.
CourtU.S. District Court — District of Connecticut

Christine L. Sciarrino, Lauren M. Nash U.S. Attorney's Office, New Haven, CT, for Plaintiff.

Gregory P. Cohan, Branford, CT, for Defendant.



This case involves a lawyer who for many years now has not paid his federal student loans. After defendant Gregory Cohan defaulted on his student loans in the early 1990s, he consolidated the defaulted loans into one federal direct consolidated loan—the subject of the current dispute. This loan was payable on an income-contingent repayment plan, whereby the amount of defendant's monthly payments would be based on his annual income. But even after consolidating his loans, defendant still did not make any loan payments and disputed the manner in which the U.S. Department of Education (DOE) calculated his monthly payments. In September 2002, many months after the government declared that payment was due, it declared defendant to be in default. The government accordingly accelerated the repayment schedule, making the full amount of his consolidated loans and accrued interest due and payable immediately. Defendant still declined to pay. The government, as plaintiff in this case, now brings this action to collect the debt. For the reasons set forth below, I now grant the government's motion for summary judgment, and I deny defendant's motion for summary judgment.


Defendant Gregory Cohan received several federal student loans to attend law school at the University of Bridgeport Law School in the late 1980s and early 1990s. After graduating, he opened his own law practice and worked as a self-employed attorney, but was not making required payments on his student loans.

In August 1999, he signed a promissory note for a federal direct consolidation loan administered by the federal government by which he would repay his earlier loans and be responsible for a new lump sum. This new loan would accrue interest at a rate of 8.25% each year. The promissory note states that its terms "will be interpreted according to the [Higher Education Act of 1965, 20 U.S.C. § 1070 et seq. ] and other applicable federal statutes and regulations." Doc. # 44–13 at 4. The note separately instructs the borrower to "[c]arefully read the repayment plan information ... that accompanies this application and promissory note to understand your repayment plan options," and then select a repayment plan. Id. at 3. Defendant selected the Income Contingent Repayment (ICR) plan.

Under the terms of the ICR regulations, which were explained in a document separate from the promissory note, a borrower's monthly payments would be determined and periodically readjusted based on his income. Specifically, his monthly payment amount would be the lesser of the following two calculations:

(i) The amount the borrower would repay annually over 12 years using standard amortization multiplied by an income percentage factor that corresponds to the borrower's adjusted gross income (AGI) as shown in the income percentage factor table in a notice published annually by the Secretary in the Federal Register; or
(ii) 20 percent of discretionary income .... defined as a borrower's AGI minus the amount of the [annual] "HHS Poverty Guidelines" ....

34 C.F.R. § 685.209(a)(2), (3) (2000) ; see also 20 U.S.C. § 1087e(e) (pocket pt.1999); Doc. # 44–11 at 2 (Direct Loans "Repayment Plan Choices" document). The plan also provided that "[i]f a borrower's AGI is not available or if, in the Secretary's opinion, the borrower's reported AGI does not reasonably reflect the borrower's current income, the Secretary may use other documentation of income provided by the borrower to calculate the borrower's monthly repayment amount." 34 C.F.R. § 685.209(c)(1) ; see also 20 U.S.C. § 1087e(e)(3) (1999) (providing that the other documentation of income must be "satisfactory to the Secretary"); Doc. # 44–11 at 2.

Finally, under the ICR plan, any balance that remained on the loan after the borrower had made payments for 25 years would be forgiven. 34 C.F.R. § 685.209(c)(4)(iv). But any periods during which the loan was in forbearance—when the borrower was not required to make payments for a number of possible reasons—would not count towards that 25–year time limit. Id. § 685.209(c)(4)(ii). The regulations also note that any interest that accrued during a period of loan forbearance would be capitalized at the end of that period. Id. § 685.205(a).

The note stated that a borrower would be in default if he did not make payments when due, if the nonpayment continues for at least 270 days, and if the government "reasonably concludes [the borrower] no longer intend[s] to honor [his] repayment obligation." Doc. # 44–13 at 4. If a borrower were in default, the government might choose to make "the entire unpaid balance ... immediately due and payable." Ibid.

The government made a series of loan disbursements to defendant between November 1999 and April 2000, totaling $97,658.55. In January 2000, the Internal Revenue Service (IRS) reported defendant's 1998 AGI to the DOE as $24,502. Doc. # 65–2 at 13. The government began sending defendant monthly bills in early 2000. At defendant's request, the government granted a forbearance until May 2000, during which defendant was not required to make any payments. Then in mid–2000, it began billing defendant again.

On May 18, 2000, defendant mailed the DOE a copy of his 1999 federal income tax return to demonstrate that his "income [was] substantially lower than it was in previous years," and asked the DOE to use it to "update the amount of my monthly payments." Doc. # 48–5 at 1. The enclosed tax return demonstrated that defendant reported his 1999 AGI as $9,538.

After the DOE received his letter, it instructed defendant to submit an "Alternative Documentation of Income" form. The form instructed a borrower to "list all taxable income you are currently receiving," and noted that "[a]ll income reported ... must have supporting documentation (i.e. pay stubs, dividend statements, canceled checks, or, when these forms of documentation are unavailable, a signed statement explaining your income source(s) and giving the addresses of these sources) submitted with this application." Doc. # 48–6 at 1. The form further required that "[a]ll supporting documentation must not be more than 90 days old." Ibid. Defendant completed this form on June 15, 2000, although there is no evidence that he submitted any other documentation at that time. The form was received by the government on June 22, 2000, and a few days later the government billed defendant for a monthly amount of $271.03. Still, defendant did not pay.

On August 10, 2000, defendant mailed the government a signed letter bearing the letterhead of his law practice, which stated his business's gross revenue and enumerated expenses from January 1, 2000, through August 10, 2000. The letter indicated that his net income was $2,907.09 during that period and asked that the government to "[p]lease adjust my repayment schedule and my monthly payments accordingly." Doc. # 44–6. On August 27, 2000, the government mailed defendant a monthly bill for $269.20. But defendant still did not pay.

On August 31, 2000, defendant mailed a supplementary letter correcting an error in the first letter but disclosing the same amount of net income. Later that month, the government determined that defendant's income was below the poverty line and that he could not afford loan payments. As a result, without consulting defendant, it applied a retroactive administrative forbearance to defendant's account, adjusting his requested forbearance to end in September 2000, rather than in May 2000. At the end of the forbearance period in September 2000, the government capitalized the accrued interest into the loan principal, and defendant was not required to make monthly payments.

In late 2001, the DOE received updated AGI information from the IRS based on defendant's 2000 tax return. Defendant had reported an AGI of $26,960 on his 2000 tax return which was comprised of two income sources: $7,770 of business income, and $21,739 which he reported as a cancelled student loan. Doc. # 44–5 at 1. In November 2001, the government began sending defendant monthly bills for $306.17 based on his 2000 AGI. Again, defendant did not pay and received several past-due notices from the DOE.

In February 2002, defendant began to contact the DOE to dispute the amount he was being charged. During a phone call on February 7, 2002, defendant complained that his 2000 AGI "included student loans that were forgiven" and which should not properly be counted as income for the purpose of his loan repayment calculation. Doc. # 66–1 at 4. Government records indicate that the DOE agreed to send defendant alternative income documentation forms and a form to request a forbearance "to clear up past due payments and prevent credit reporting" and explained to defendant on the phone that he should include a "self-cert letter."1 Ibid.

The government continued billing defendant $306.17 each month, and defendant continued not to pay. The government made several collection calls to defendant in March 2002, and government records note that defendant was angry on the phone and "[r]efused available alternatives," including additional loan forbearances. Id. at 6–7. During a phone call at the end of March 2002, he again disputed the government's use of the 2000 AGI reported by the IRS, and agreed to send in alternative documentation of his income.

On April 4, 2002, defendant sent a letter to the government on his business's letterhead stating his business revenue and breaking down his business expenses between January 1, 2000, and December 31, 2000, and noting that he had received "$21,739 of debt cancellation." Doc. # 44–8 at 2; ...

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