Attorney General Peter F. Kilmartin Friday joined a coalition of 19 states in suing the U.S. Department of Education and Secretary Betsy DeVos for abandoning critical federal protections that were set to go into effect on July 1, 2017.
The complaint, filed in U.S. District Court, alleges that the Department of Education violated federal law by abruptly rescinding its Borrower Defense Rule which was designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans. The rule was finalized by the Obama administration in November 2016 after nearly two years of negotiations, following the collapse of Corinthian Colleges, a national for-profit chain.
“It should come as no surprise that this Administration would rescind such an important protection for students considering the actions of the President’s own Trump University,” said Attorney General Kilmartin. “We worked diligently for several years to have these protections put in place, only for Secretary DeVos to clawback the Rule, leaving countless students at the whim of for-profit universities’ deceptive and strong-arm tactics.”
In May 2017, Secretary DeVos announced that the Department was reevaluating the Borrower Defense Rule. On June 14, the Department announced its intent to delay large portions of the Borrower Defense Rule without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process. The Department simultaneously announced its intent to issue a new regulation to replace the Borrower Defense Rule.
In a short notice published in the Federal Register, the Department cited pending litigation in the case California Association of Private Postsecondary Schools (CAPPS) v. Betsy DeVos as an excuse for delaying implementation of the Borrower Defense Rule. State attorneys general argue in their lawsuit that “the Department’s reference to the pending litigation is a mere pretext for repealing the Rule and replacing it with a new rule that will remove or dilute student rights and protections.”
Earlier this year, Attorney General Kilmartin sent a letter to the Secretary DeVos warning that
rolling back federal protections would signal “open season” on students for some of the worst actors in the for-profit school industry.
“Student loan debt is one of the greatest hindrances to economic security for too many young people,” added Attorney General Kilmartin. “In the past, many for-profit colleges and universities made promises of well-paying jobs upon completion of the programs, only for students to be left with worthless degrees and tremendous debt. We cannot go back to those days. We must continue to keep strong regulations in place to ensure students are receiving a quality education at a fair price.”
Additionally, without the protections of the current Borrower Defense Rule, many students who are harmed by the misconduct of for-profit schools are unable to seek a remedy in court. The Borrower Defense Rule limits the ability of schools to require students to sign mandatory arbitration agreements and class action waivers, which are commonly used by for-profit schools to avoid negative publicity and to thwart legal actions by students who have been harmed by schools’ abusive conduct.
Today’s complaint asks the Court to declare the Department’s delay notice unlawful and to order the Department to implement the Borrower Defense Rule.
The Department of Education’s negotiated rulemaking committee helped develop the Borrower Defense Rule – in large part as a result of state and federal investigations into for-profit schools such as Corinthian Colleges. Under the rule, a successful enforcement action against a school by a state attorney general entitles borrowers to obtain loan forgiveness, and enables the Department of Education to seek repayment of any amounts forgiven from the school.
The coalition involved in today’s lawsuit include the attorneys general of California, Connecticut, Delaware, Hawaii, Iowa, Illinois, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington, Vermont, Virginia, and the District of Columbia.
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