Legal Battle Exposes Lending Discrimination Against Immigrants
A major student loan refinancing company faces serious legal consequences after allegedly slamming the door on immigrant borrowers. Pennsylvania-based GradFin, owned by KeyBank, finds itself in hot water following a federal class-action lawsuit filed by the Latino civil rights group MALDEF. The suit claims GradFin violated Section 1981 of the Civil Rights Act of 1866 by denying services to immigrants and DACA recipients.
The case revolves around a DACA recipient who made all payments on time but still got rejected for refinancing. The lawsuit was initiated on November 22, 2024 in the U.S. District Court for the District of Colorado. Classic corporate logic – take someone’s money until they ask for better terms, then suddenly their immigration status becomes an issue. The lawsuit marks MALDEF’s 18th since 2017 targeting financial discrimination against DACA recipients. Apparently, some companies need multiple legal beatings before they get the message.
This isn’t the only recent case of financial institutions treating immigrants like second-class customers. Kinecta Federal Credit Union just coughed up a $77,500 settlement after denying an auto loan to Rogelio Esqueda because his social security card came through DACA. They also agreed to retrain staff, which is corporate-speak for “we’ll try not to discriminate so blatantly next time.” The judge granted final approval for this class-action settlement, ensuring 31 class members will each receive $2,500 in compensation.
Section 1981 of the Civil Rights Act explicitly prohibits discrimination based on citizenship or alienage in contracts, including loans. California’s Unruh Civil Rights Act adds further protection against discrimination based on immigration status. Despite these laws being crystal clear, financial institutions keep finding new ways to slam doors in immigrants’ faces. Similar to how historical data bias perpetuates discrimination in AI systems, these lending practices continue to disadvantage minority groups.
The real-world impact is brutal. Immigrant borrowers stuck with high-interest loans can’t refinance despite perfect payment histories. They’re forced to shell out more cash each month while watching their peers get better terms. Talk about playing the game on hard mode.
For many DACA recipients, education represents their shot at stability. When lenders like GradFin deny refinancing, they’re effectively punishing people for daring to improve themselves through education. The pattern creates an endless cycle – higher payments mean less financial security, which means fewer opportunities for advancement.
KeyBank, GradFin’s parent company, ranks as the 25th largest bank in America. With great size comes great responsibility – or at least the expectation that you’ll follow basic civil rights laws. Apparently, that was too much to ask.
