States, DC Sue DeVos Over Delay of Implementing Student Loan Protections
Jul 08 2017
The lawsuit, filed in federal court in Washington, says DeVos violated rule-making laws when she announced a June 14 decision to delay so-called borrower defense to repayment rules, which were finalized under President Barack Obama and scheduled to take effect July 1.
In enacting the borrower defense rule a year ago, the Obama administration reviewed over 10,000 comments from students, school officials and consumer advocates, and gave schools more than six months to prepare for the implementation. In response to a Freedom of Information Act request by BuzzFeed News, the Education Department said it had not approved a single fraud claim since the day of Trump's inauguration, while thousands of students already promised forgiveness are still waiting. The state of California won a judgment of more than $1 billion against Corinthian previous year for misleading students in its advertising. The objective of the effort, explained Warren is to challenge the "illegal attempt" of Devos "to protect fly-by-night schools that cheat students and bury them in mountains of debt". Bauer and Del Rose have been waiting for the rules to be enacted so they could file their lawsuit.
New Mexico's Attorney General signed onto a lawsuit against the head of the U.S. Department of Education over rescinding protections for students who borrow money for college.
One of the delayed provisions required schools at risk of closing provide to provide financial collateral.
In April, Education Secretary Betsy DeVos made known her stance on assisting students with loans after she did away with legal regulations implemented by President Barack Obama in October -- which served the objective of aiding those riddled with student debt. It also banned mandatory arbitration agreements, which prevented many students from suing schools they believed to have defrauded them.
Obama's administration wrote new rules after the "2015 collapse of Corinthian Colleges, a chain of four-profit schools, amid allegations of fraud".
DeVos said last month that nearly 16,000 borrower defense claims are being processed by the Education Department and that some borrowers could have their loans discharged in "the next several weeks".
In an email, Attorney General's Office spokesman James Hallinan said, "Our Office is now investigating exactly how many students are struggling to pay off loans from these for-profit institutions".
"Despite the high costs of for-profit programs, students attending for-profit institutions often fail to realize the returns on their investment in education-facing high default rates on their loans and high unemployment rates after leaving school", the complaint continued.
Also Thursday, two students sued the Education Department in the same federal court over the delayed rules. But Donald Trump's pick to lead that agency, Betsy DeVos, opted to postpone the enactment of those regulations, arguing that they created "a muddled process that's unfair to students and schools, and puts taxpayers on the hook for significant costs". Taxpayers are picking up most of the tab, to the tune of $16.6 billion over the next ten years.