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Democratic AGs Sue DeVos on Borrower Defense

December 15, 2017

Four Democratic attorneys general filed separate lawsuits Thursday seeking to compel Education Secretary Betsy DeVos to grant debt relief to students defrauded by for-profit colleges.

California Attorney General Xavier Becerra filed a lawsuit in the Northern District of California arguing that delays in approving borrower-defense claims of defrauded Corinthian Colleges students violate federal law. A separate lawsuit filed in the D.C. District Court by the attorneys general of Massachusetts, Illinois and New York argues that the Department of Education has illegally delayed review of pending claims and improperly rejected group discharge for thousands of borrowers who were misled by for-profit institutions.

Borrower-defense applications allow student loan borrowers to apply for loan discharge when they are misled or defrauded by their institution. Tens of thousands filed the debt-relief claims after the collapse of Corinthian in 2015 and ITT Tech in 2016. Although the Department of Education granted 28,000 claims between 2015 and Jan. 20 of this year, the Trump administration stopped processing the claims this year as it re-examined the existing process for ruling on applications. More than 95,000 borrower-defense claims, meanwhile, are pending review by the department.

Earlier this week, the department's inspector general called for review of the claims to resume while also recommending the Office of Federal Student Aid take steps to better document the legal memorandums it uses to justify discharges and establish clear policies on review of unique claims, among other changes.

Becerra's lawsuit argues that the department has provided no reasonable or adequate justification for the delay in reviewing pending claims, which it says are indistinguishable from already approved claims. And DeVos, he argued, has evinced hostility toward the borrower-defense process.

"After having their American dreams stolen by a so-called higher education institution, Corinthian students are now being denied critical relief by a secretary of education hostile to their plight," he said in a statement. "It is hard to believe that we are forced to sue the Department of Education to compel Secretary DeVos to carry out the department's legal duty and help these students rebuild their lives."

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