States Sue US Education Department Over Student Loan Debt Relief

States Sue US Education Department Over Student Loan Debt Relief

Education Secretary Betsy DeVos should not delay fraud protections for student loan borrowers, a lawsuit filed Thursday against the Department of Education by 18 states and the District of Columbia argues. "Her decision to cancel vital protections for students and taxpayers is a betrayal of her office's responsibility and a violation of federal law".

California Attorney General Xavier Becerra filed a lawsuit against the U.S. Department of Education for unlawfully delaying the implementation of regulations aimed at protecting students from deceptive practices and fraud.

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.

The rules, known as the Borrower's Defense Regulations, were announced last fall and were meant to ensure "that students who are lied to and mistreated by their school get the relief they are owed, and that schools that harm students are held responsible for their behavior", former U.S. Secretary of Education John B. King, Jr.

After the Obama administration announced the rules, tens of thousands of students filed claims for loan forgiveness - the vast majority of them against disgraced for-profit colleges.

According to the lawsuits, since the Education Department is effectively repealing the Borrower Defense rule by delaying it indefinitely, it violated the law by not going through the required public notice and comment process. The rule prohibits schools that receive federal funds from relying on existing agreements or entering into new contracts with their students that include forced arbitration provisions.




Investors have been betting that the Trump administration would loosen regulations around for-profits colleges for months. Under the Borrower Defense Rule, former students of those schools who did not take out subsequent federal student loans qualify for automatic closed school discharge of their loans. But in a June statement, DeVos said her department would pause the regulations in order to "take a step back and make sure these rules achieve their objective: helping harmed students".

DeVos, a Republican, has said accelerating the debt cancellation process would put taxpayers on the hook for significant costs, and a delay is needed while current litigation in California over the rules works through the legal system. This is important because these clauses prevent students from suing the school in court and from joining their complaints together in class actions.

The groups say the students were counting on the borrower defense rule to give them their day in court.

But the attorneys general-all of whom are Democrats-said in their suit that DeVos is trying to avoid public hearings while betraying college students who have been duped by for-profit colleges. Attorney General Becerra and eight other attorneys general previously filed a motion to intervene in a lawsuit challenging the Borrower Defense Regulations so that they could ensure that the regulations are adequately defended.

Last year, the Obama administration tried to change that.

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