U.S. Department of Education
U.S. Education Secretary Betsy DeVos

18 states sue U.S. Department of Education over student loan protections

July 6, 2017
They want Secretary Betsy DeVos to restore rules that protected students from abuses by for-profit colleges.

Attorneys general in 18 states and the District of Columbia have sued the U.S. Education Department over Secretary Betsy DeVos' decision to suspend rules established to protect students from abuses by for-profit colleges.

The New York Times reports that the lawsuit, filed in federal court in Washington, D.C., seeks to have the rules, which had been scheduled to take effect July 1, restored.

The rules, known as borrower defense, were finalized in October by the Obama administration after years of negotiation and review. DeVos blocked the planned changes, citing a federal lawsuit filed in May by an association of for-profit colleges in California that is seeking to block the rules.

DeVos also criticized the rules as “a muddled process that’s unfair to students and schools,” and she said she would establish a new rule-making committee to reconsider the matter.

The states say in their lawsuit that the department's rationale for the delay — the California lawsuit — is a “mere pretext” for repealing and replacing rules that had already been finalized. 

“Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans,” says Maura Healey, Massachusetts attorney general. “Her decision to cancel vital protections for students and taxpayers is a betrayal of her office’s responsibility and a violation of federal law.”

The Obama administration’s push to streamline and expand the borrower defense process came after hundreds of for-profit colleges were accused of widespread fraud and collapsed, leaving their enrolled students with huge debts and no degrees. The failure of two mammoth chains, Corinthian Colleges and ITT Technical Institute, gave the issue added urgency.

An existing federal law allows borrowers to apply for loan forgiveness if they attended a school that misled them or broke state consumer protection laws. After the wave of for-profit failures, the system was overwhelmed by applicants.

The rules that DeVos suspended would have required schools that are at risk of closing to put up financial collateral. They also would ban mandatory arbitration agreements, which have prevented many students from suing schools that they believe have defrauded them.

In addition to Massachusetts, the lawsuit has also been filed by the attorneys general of California, Connecticut, Delaware, Hawaii, Iowa, Illinois, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia.

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