State Attorneys General File Lawsuit Against Education Department, DeVos
Attorneys general from 18 states and Washington, D.C., filed a lawsuit Thursday against the U.S. Department of Education and Secretary Betsy DeVos seeking to stop the department’s efforts to block new rules that would help erase federal student loan debt for borrowers cheated by colleges that acted fraudulently. The borrower defense rules were issued in October by the Obama administration and were set to take effect July 1.
DeVos, who has criticized the rules, says she put them on hold because of a lawsuit filed earlier this year by California for-profit colleges.
The lawsuit calls that reasoning “a mere pretext” and seeks to reinstate borrower defense. Two students also have filed a federal lawsuit over the move to block the rules.
What does borrower defense mean?
Borrower defense rules allowed students who attended for-profit public institutions with federal student loans to apply for debt forgiveness if the college they attended misled them, violated certain laws, or in other ways engaged in misconduct.
The rules were put into place after several institutions closed last year due to allegations of fraud. Borrower defense was intended to create a process for evaluating claims by students that the institution they attended had misled them. It also banned many of the common arbitration clauses found in enrollment contracts.
Some of the key provisions include:
- Empowering the secretary of education to provide sweeping debt relief to groups affected by widespread misrepresentation from a single institution.
- Protecting taxpayers by ensuring institutions with financial difficulties provide protection against the risk of investment for the government and holding them responsible for the debt if it is discharged due to misconduct.
- Requiring schools with a history of producing students with poor loan repayment to increase the transparency of their advertising materials and provide an adequate warning to potential students.
- Empowering students with easy access to loan discharge information when a school closes.
Support for these actions was widespread in the government, throughout the academic community, and from parents and students.
Reaction to the lawsuit
The Center for Responsible Lending praised the lawsuit, saying in a statement that the rules are designed “to protect borrowers from abusive for-profit colleges and provide relief for students defrauded by them.”
Ashley Harrington, counsel for the center, says DeVos and the department haven’t been advocates for students.
“These Attorneys General are setting an example of what it means to stand up for struggling students,” she says in a statement. “The premise of the Borrower Defense to Repayment Rule is simple – students defrauded by their schools should be able to have their loans discharged. Secretary DeVos has consistently sided with private interests, often at the expense of student borrowers across the country. …
“Based on its recent track record and substantial connections with the for-profit college industry, we have little confidence that this department, under Secretary DeVos’ leadership, will produce pragmatic rules that defend students and taxpayers from predatory, for-profit college institutions.”
The states included in the lawsuit are:
- New Mexico
- New York
- North Carolina
- Rhode Island
A spokeswoman for the Education Department called the lawsuit “ideologically driven” and criticized the effort.