Press Release  AG Campbell Leads Multistate Amicus Brief In Support Of Stronger Relief Options For Borrowers Harmed By Predatory Institutions

BOSTON — Attorney General Andrea Joy Campbell’s Office has led a coalition of 23 attorneys general in filing an amicus brief with the U.S. Court of Appeals for the Fifth Circuit in the case Career Colleges and Schools of Texas v. U.S. Department of Education, et al. The amicus brief urges the court to uphold the Department of Education’s “Borrower Defense Rule,” which ensures protections for student loan borrowers who experience fraud and abuse by educational institutions and safeguards defrauded borrowers from being burdened with student loan debt. 

The amicus brief was filed in support of the U.S. Department of Education in a lawsuit brought in February 2023 by the Career Colleges and Schools of Texas (CCST), an organization representing for-profit colleges and trade schools, which seeks to challenge the Department’s “Borrower Defense Rule.” The Rule, amongst other protections, allows borrowers who experienced certain misconduct on the part of their schools to receive debt forgiveness on their federal student loans.  

“Amidst a national student debt crisis, we must continue to fight against persistent attacks on existing borrower protections and defend meaningful consumer protections,” said AG Campbell, “I am proud of my office’s dedicated work in leading this multistate effort in support of crucial relief for borrowers harmed by predatory for-profit institutions, which disproportionally exploit and abuse low-income students, students of color, and servicemembers.” 

In April 2023, CCST filed a motion for a preliminary injunction against the student borrower protections. The motion was initially denied by the federal trial court but then granted pending CCST’s appeal by the Fifth Circuit in July 2023, allowing CCST to temporarily evade compliance with the Department’s borrower defense protections. CCST’s appeal from the trial court’s denial of a preliminary injunction is set to be heard in November 2023.  

The amici states’ brief describes how states regularly investigate and take enforcement action against predatory postsecondary institutions through their consumer protection offices to redress widespread and systemic unfair and deceptive practices, primarily by private, for-profit institutions.  The states’ experience assisting thousands of student borrowers to secure meaningful relief under prior versions of the Department’s borrower defense regulations demonstrates the importance of such relief. CCST’s lawsuit seeks to eliminate such critical protections. In Massachusetts specifically, thousands of impacted borrowers have been meaningfully assisted through the Department’s borrower defense regulations.   

The amici states describe the importance of the Department’s “Borrower Defense Rule” and argue that the Rule has been lawfully implemented by the Department in accordance with the federal Higher Education Act. In cases where state investigations have revealed wrongdoing by predatory institutions, the Rule augments the other remedies available via state enforcement actions by providing borrowers with the possibility of discharging their federal student loans that were based upon institutions’ fraudulent misconduct—thereby not only granting meaningful relief to borrowers, but also deterring future institutional misconduct.  

The amici states’ brief also rebuts CCST’s claim that, in order to be eligible for borrower defense relief based on their schools’ misconduct, borrowers must first go into default, with all the grievous harms default entails for borrowers, their families, and their communities. Rather, the amici states argue, the Department has the legal authority to grant student loan discharge through the Rule for borrowers who affirmatively seek it.  

In accordance with the states’ experience investigating widespread and systemic misconduct and wrongdoing by predatory institutions often impacting large cohorts of borrowers, the amici states further argue in support of the Rule’s group application process. This process enables the states to file discharge claims on behalf of groups of affected borrowers instead of on a student-by-student basis. Not only does the Rule’s group discharge process better ensure that larger numbers of harmed borrowers are able to access relief, but also acts as a more cost-effective method of recourse than adjudicating individual claims.  

A copy of the full multistate amicus brief may be found here.

The multistate amicus brief is the AG’s Office’s most recent effort in supporting student borrowers amidst a national student debt crisis. Earlier this fall, with the resumption of federal student loan payments after over a three-year payment pause, AG Campbell led a multistate letter urging the Biden Administration to consider stronger protections for student loan borrowers.  

This matter was handled by the AG’s Consumer Protection Division Chief Yael Shavit and Deputy Division Chief Michael N. Turi, as well as State Solicitor Bessie Dewar and Office of the State Solicitor paralegal Samuel Ades.   

The Massachusetts AGO is joined by California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin in filing this brief.

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