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23 AGs Challenge DeVos's Borrower-Defense Rule

July 16, 2020
 
 

The attorneys general of nearly half of the nation’s states filed a federal lawsuit Wednesday, trying to do what Congress couldn’t -- end Education Secretary Betsy DeVos’s new borrower-defense rule, which makes it more difficult for students who have been defrauded, particularly by for-profit colleges, to have their student loans canceled.

The lawsuit, filed in U.S. District Court for the Northern District of California, on behalf of the attorneys general of 22 states and the District of Columbia, continues the long battle over the rule. It comes two weeks after the House failed to override President Trump’s veto of a measure passed by Congress that would have blocked the rule from taking effect July 1.

In a statement, the Education Department dismissed the suit.

"This is yet another grandstanding, politically driven lawsuit meant to grab a cheap headline, and the media seems to always oblige," the department said in a statement. "To any objective observer, our borrower defense rule clearly protects students from fraud, ensures they are entitled to financial relief if they suffered harm and holds schools accountable."

The suit, announced by California attorney general Xavier Becerra and Massachusetts attorney general Maura Healey, is the second in the nation seeking to block the rule. Another suit in New York federal court in February by the Project on Predatory Student Lending and the Public Citizen Litigation Group is still ongoing.

The debate over the rule stems from a flood of loan-discharge applications after the collapse of the for-profit chain Corinthian Colleges in 2015. In response, the Obama administration clarified the government’s rules in 2016 to make it easier for students to get discharges. But the rule was blocked by DeVos, who announced a new, more stringent rule in July 2018. Among other things, it requires borrowers to demonstrate that their institution knowingly made false statements in advertising or recruitment materials or made promises about a program with a reckless disregard for the truth.

“The U.S. Department of Education has replaced critical borrower protections with a process that makes it virtually impossible for victimized students to get the relief they should qualify for,” Becerra said.

In the lawsuit, the attorneys general claimed that DeVos’s decision to replace the Obama administration rule was arbitrary and capricious, and accused her of rejecting decades of department determinations, basing her analysis on fundamental misunderstandings and disregarding facts. The suit also claimed that DeVos’s rule disregards Congress’s intent to help defrauded borrowers by creating an “illusory process that makes it almost impossible for students to qualify for borrower defense.”

Joining Becerra and Healey in the suit are the attorneys general of Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Wisconsin and the District of Columbia.

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