To Protect Students From Loan Fraud, 18 States Sue Betsy DeVos

by | July 7, 2017

By Jim Puzzanghera

Eighteen states on Thursday sued Education Secretary Betsy DeVos, alleging she unlawfully delayed new federal regulations designed to protect student loan borrowers from being ripped off by for-profit colleges and other schools.

The rules, which would have made it easier for students to have loans forgiven if they were defrauded or deceived, were developed by the Obama administration and had been set to take effect last Saturday.

But last month DeVos delayed their implementation and launched an effort to rewrite them, arguing they were unfair to students and schools while putting taxpayers at risk for "significant costs."

The suit, filed by attorneys general from 18 states plus the District of Columbia, said DeVos' move violated the Administrative Procedures Act because she did not satisfy the standards for a delay, and also failed to give the proper notice or offer the public time to comment.

The suit also criticized DeVos for saying a reason for the delay was a pending legal challenge to the regulations by the California Association of Private Postsecondary Schools. The "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," the suit said.

California Attorney General Xavier Becerra was among the officials, all Democrats, who filed the suit. Students shouldn't have to worry that "their American dream will be stolen by unscrupulous purveyors of a sham college education," he said.

"The Trump administration should do everything in its power to protect our students," Becerra said. "These regulations should be implemented because they're good for students and because that's what the law requires."

The suit, led by Massachusetts Attorney General Maura Healey, was filed in U.S. District Court in Washington.

"These rules served as critical protections against predatory for-profit schools that exploit hard-working students _ students who are simply trying to invest in their own education and future," said New York Attorney General Eric Schneiderman, who also was among those filing the suit.

A spokeswoman for DeVos did not immediately respond to a request for comment Thursday.

The regulations, known as borrower defense to repayment, were developed after a series of high-profile collapses of for-profit chains such as Corinthian Colleges Inc. and ITT Technical Institute left thousands of students stranded.

The rules were adopted in November and designed to streamline the loan-forgiveness process for students who have been defrauded or deceived.

They were to have taken effect July 1 along with a new gainful employment rule that would have limited the amount of debt that students at career-training schools _ for-profit and not-for-profit _ could take out relative to the incomes they were expected to earn.

Schools that exceeded the limits would risk losing their ability to offer federal student aid.

The for-profit college industry strongly opposed the new rules. In May, the California Association of Private Postsecondary Schools filed a federal lawsuit to block the borrower defense rules from going into effect.

Becerra and seven other state attorneys general, along with the District of Columbia, filed a motion to intervene in that suit, saying they wanted to make sure the regulations were adequately defended.

On June 14, DeVos announced she was delaying the borrower defense and gainful employment rules as part of a "a regulatory reset."

The Obama administration's efforts "missed an opportunity to get it right," she said.

DeVos plans to hold two public hearings this month on the rules and said her aim is "to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow."

She specifically cited the pending litigation against the borrower defense regulations as a reason for delaying those rules.

(c)2017 Los Angeles Times