Press Release

Press Release AG Healey and Local Students Win Federal Court Ruling Against Education Secretary Devos for Axing Student Loan Protections

Judge Rules that U.S. Department of Education’s Delay of the Borrower Defense Rule Violated Federal Law
For immediate release:
9/13/2018
  • Office of Attorney General Maura Healey

Media Contact for AG Healey and Local Students Win Federal Court Ruling Against Education Secretary Devos for Axing Student Loan Protections

Jillian Fennimore

BostonMassachusetts Attorney General Maura Healey and two Boston-area students won a victory in federal court against Education Secretary Betsy DeVos after challenging the U.S. Department of Education’s plan to scrap federal protections for students cheated by predatory, for-profit schools. The opinion called Secretary DeVos’ actions “unlawful,” “arbitrary and capricious” and “procedurally invalid,” and ordered an immediate hearing in Washington, D.C to determine remedies.

The decision, issued yesterday in the U.S. District Court in Washington, D.C., is the result of a multistate lawsuit led by AG Healey and joined by 19 other state attorneys general, and a related case brought by Public Citizen and the Project on Predatory Student Lending on behalf of two students who attended the now-bankrupt New England Institute of Art, a for-profit school in Brookline, Massachusetts. AG Healey and the students alleged that the U.S. Department of Education violated federal law by abruptly rescinding its Borrower Defense Rule which was designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans.

“For years, we’ve fought for needed protections for student borrowers in Massachusetts,” AG Healey said. “This decision is a victory for every family defrauded by a predatory for-profit school and a total rejection of Donald Trump and Betsy DeVos’ agenda to cheat students and taxpayers. It’s time for this rule to go into effect and give thousands of students the relief they’ve been waiting for.”

“This is a major victory for students and for anyone who cares about having a government that operates under the rule of law, instead of as a pawn of the for-profit college industry,” said Project on Predatory Student Lending Director Toby Merrill. “Because of the willingness of two students to stand up to the Department of Education’s unfair and unjust policies, hundreds of thousands of students will be protected. We are proud to represent them, and deeply grateful to Attorney General Maura Healey and Attorneys General across the country who have chosen to stand with students and against this predatory industry time and time again.”

Judge Randolph Moss of the United States District Court for the District of Columbia has scheduled a status conference for Friday, Sept. 14 at 10:30 a.m. to address remedies. The AG’s Office will be asking the court to order the Department to implement the Borrower Defense Rule immediately and in full. 

The Borrower Defense Rule was finalized by the Obama administration in November 2016 after nearly two years of negotiations, following the collapse of Corinthian Colleges, a national for-profit chain. The rule was set to go into effect on July 1, 2017.

In May 2017, Secretary DeVos announced that the Department was reevaluating the Borrower Defense Rule and later announced its intent to delay large portions of the Borrower Defense Rule without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process. The Department simultaneously announced its intent to issue a new regulation to replace the Borrower Defense Rule.

Without the protections of the Borrower Defense Rule, many students defrauded by for-profit schools are unable to seek a remedy in court. The Borrower Defense Rule also prohibits schools from enforcing mandatory arbitration agreements and class action waivers, which are commonly used by for-profit schools to thwart legal actions by students who have been harmed by schools’ abusive conduct.

AG Healey’s Office has been at the forefront of efforts to secure relief for defrauded students. Last month, the AG’s Office urged the Department to rescind its proposed regulations that provided no realistic prospect for borrowers to discharge their loans. In December 2017, AG Healey sued Secretary DeVos for failing to provide federal loan discharges for students victimized by Corinthian Colleges and subjecting them to wage garnishment and tax refund interception. In June 2017, AG Healey demanded that the Department stop delaying loan discharges for students victimized by predatory for-profit schools, including claims that have already been approved. In October 2017, AG Healey sued to protect the Gainful Employment Rule, a federal regulation designed to protect students and taxpayers from predatory for-profit schools.

Addressing fraud and abuse in student lending has been a top priority for AG Healey since taking office, whether taking predatory schools to court, changing the practices of student loan servicers, going after unlawful student loan “debt relief” companies, or helping student borrowers find more affordable repayment solutions through her first-in-the-nation Student Loan Assistance Unit.

Massachusetts borrowers who are looking for student loan help or information should visit the AG’s Student Loan Assistance page or call the Student Loan Assistance Unit Hotline at 1-888-830-6277.

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Media Contact for AG Healey and Local Students Win Federal Court Ruling Against Education Secretary Devos for Axing Student Loan Protections

Office of Attorney General Maura Healey 

Attorney General Maura Healey is the chief lawyer and law enforcement officer of the Commonwealth of Massachusetts.

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