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Press Release AG Healey Leads Lawsuit Against Secretary DeVos for Regulations That Put Predatory Schools over Students

Coalition of 23 Attorneys General Sue U.S. Department of Education for Unlawfully Repealing the 2016 Borrower Defense Rule
For immediate release:
7/15/2020
  • Office of Attorney General Maura Healey

Media Contact for AG Healey Leads Lawsuit Against Secretary DeVos for Regulations That Put Predatory Schools over Students

Alex Bradley

BostonMassachusetts Attorney General Maura Healey today co-led a coalition of attorneys general in filing a lawsuit against Secretary of Education Betsy DeVos and the U.S. Department of Education for unlawfully repealing the 2016 Borrower Defense Rule and replacing it with regulations that do nothing more than benefit predatory for-profit schools at the expense of defrauded students. 

The complaint, led by AG Healey and California Attorney General Xavier Becerra and joined by 21 other attorneys general, claims that under the Trump Administration, the Department repealed the 2016 Borrower Defense Rule and replaced it with new regulations in 2019 that make it virtually impossible for victimized students to obtain financial relief, while simultaneously rolling back oversight over unscrupulous and predatory schools.

Earlier this year, in a bipartisan effort, Congress voted to strike down the 2019 regulations using the Congressional Review Act. In May, President Trump vetoed the bipartisan resolution, in the first veto of domestic policy legislation by this Administration.

“This new rule is unworkable, it’s unfair, and it’s a gift to the predatory for-profit schools that Betsy DeVos has been promoting since day one,” said AG Healey. “As an office that fights every day for vulnerable students and families, we know how disastrous this rule will be for them. We have taken this action today to make sure that the Department of Education does not cut off the relief they deserve.”

“Secretary Devos has a vendetta against students and her borrower defense rule shows how far she will go to deny defrauded students their rights under the law,” said Eileen Connor, Legal Director at the Project on Predatory Student Lending. “The only way that students have been able to receive any measure of justice from the Department of Education has been through the courts. That’s why we filed a lawsuit in February alongside student advocates to challenge this devastating rule, and we thank Attorneys General Healey and Becerra for standing with students and fighting alongside us for their rights in court.”

“Veterans and low-income communities of color have borne the brunt of predatory schools’ worst practices,” said Persis Yu, Director of the National Consumer Law Center’s Student Loan Borrower Assistance Project. “Yet instead of providing borrowers with a fair path to seek the loan relief promised by the Higher Education Act, the U.S. Department of Education gave schools the green light to defraud students with impunity. We applaud this broad coalition of 23 state attorneys general for standing up for the interests of borrowers when the federal government has failed to protect them as required by law.”

The 2016 Borrower Defense Rule provided critical protections for student borrowers who have been misled or defrauded by predatory schools by providing borrowers a transparent and efficient pathway to get debt relief from their federal student loans and creating robust deterrents for schools that engage in misconduct. These regulations were built on lessons learned from the collapse of Corinthian Colleges – a predatory, for-profit chain of colleges that left tens of thousands of students across the nation in need of relief. They also protected taxpayers by holding schools accountable that engage in misconduct.

Upon taking office, Secretary DeVos sided with for-profit schools and demonstrated public hostility to the 2016 Borrower Defense Rule. Just two weeks before the rule was set to go into effect, the Trump Administration unlawfully delayed its implementation. 

In July 2017, AG Healey led a coalition of 20 state attorneys general in bringing a successful lawsuit challenging the Department’s failure to implement the 2016 Borrower Defense Rule. The Court vacated the unlawful delays, and in October 2018, after rejecting a challenge to the 2016 Borrower Defense Rule, 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.

Today’s lawsuit argues that the Department’s repeal and replacement of the 2016 Borrower Defense Rule violates the Administrative Procedure Act because it was done without explanation or reasoned decision making and does not comply with Congress’s requirement in the Higher Education Act that the Secretary of Education implement a process for borrowers who have been subjected to a school’s misconduct to obtain relief.

Rather than helping struggling borrowers, the 2019 regulations thwart relief for defrauded students and shield predatory schools from being held accountable for their misconduct. The regulations also, for the first time, completely eliminate violations of state consumer protection law as viable defenses to repayment of federal student loans.

AG Healey has established herself as a national leader on behalf of distressed student borrowers, committed to challenging the illegal policies of Secretary DeVos and the U.S. Department of Education.

Other actions by AG Healey include uncovering widespread misconduct at Education Management Corporation, which includes the New England Institute of Art in Brookline, ITT Technical Institute, Corinthian Colleges, American Career Institute and others, and securing relief for thousands of defrauded student borrowers.

Joining AG Healey and AG Becerra in today’s lawsuit are the attorneys general of Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Wisconsin, and the District of Columbia.

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

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Media Contact for AG Healey Leads Lawsuit Against Secretary DeVos for Regulations That Put Predatory Schools over Students

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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