Press Release  AG Healey Co-Leads Court Brief in Support of Challenge to Unlawful Trump-Era Borrower Defense Rule

BOSTON — Massachusetts Attorney General Maura Healey today co-led a multistate amicus brief advocating for the rights of federal student loan borrowers. The brief, filed in the U.S. Court of Appeals for the Second Circuit, supports the New York Legal Assistance Group’s (NYLAG) lawsuit challenging action taken by the Trump Administration’s Department of Education that unlawfully repealed and replaced federal “borrower defense” regulations.

Borrower defense is the process by which students can seek relief from their federal student loans when they have been defrauded by their school. The Trump Administration scrapped previous borrower defense regulations that protected students from deceitful practices with new regulations that favor predatory for-profit schools and all but shut the door on students seeking debt relief. In its lawsuit, NYLAG, a legal aid organization that is represented by the Project on Predatory Student Lending and Public Citizen Litigation Group, argues that the Trump Administration’s 2019 Borrower Defense Rule is arbitrary and capricious and must be stricken.

“The sole purpose of this disastrous replacement rule is to protect predatory schools and prevent students who were ripped off from getting relief,” AG Healey said. “I’ve said from the start we cannot let these unworkable regulations remain in place. Our coalition fully supports NYLAG’s lawsuit to restore the legal rights of student borrowers, and I am heartened that the Biden Administration is committed to a new rulemaking process to implement a more robust rule.”

The federal Higher Education Act requires the U.S. Secretary of Education to issue borrower defense regulations that provide a pathway for students to discharge federal student loan debt if they were victimized by a school. In 2016, the Obama Administration’s Department of Education created strong protections for student borrowers who were defrauded by predatory for-profit colleges by establishing a fair and transparent borrower defense process for student loan debt relief. Following the change in presidential administrations, in 2019, the Department rescinded those regulations and replaced them with new rules designed to prevent defrauded students from obtaining loan relief and shield predatory schools from being held accountable for their misconduct.  

Today’s amicus brief supports NYLAG’s arguments that the Trump administration’s 2019 Borrower Defense Rule is arbitrary and capricious and therefore should be eliminated. It further supports NYLAG’s allegations that in rescinding and replacing the 2016 Borrower Defense Rule, the Department relied on inaccurate, unsupported, and inconsistent assumptions, among other arguments.

In July 2020, AG Healey co-led a coalition of attorneys general in filing a lawsuit against then-Education Secretary Betsy DeVos and the U.S. Department of Education for unlawfully repealing and replacing the 2016 Borrower Defense Rule. In July 2017, AG Healey led a coalition in bringing a successful lawsuit challenging the Department’s failure to implement the 2016 Borrower Defense Rule. In October 2018, the Court rejected a challenge to the 2016 rule by for-profit schools and ordered its immediate implementation for students nationwide. This decision resulted in approximately $381 million in automatic loan discharges for students whose schools closed on or after November 1, 2013.

In May 2021, the Biden Administration announced that it would begin the process of reviewing current federal student loan relief programs, including the Borrower Defense Rule, which involves a negotiated rulemaking process to promulgate new regulations.

Today’s amicus brief, co-led by AG Healey and California Attorney General Rob Bonta, is also joined by the attorneys general of Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.

Handling the matter for Massachusetts are Assistant Attorneys General Yael Shavit and Mercy Cover of AG Healey’s Consumer Protection Division.

A copy of the brief is available here.

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