Coalition of states sues Education Secretary DeVos over student loan protections

The "borrower defense" rules were finalized in October 2016 by the Obama administration and were scheduled to take effect July 1, a report by The New York Times said.
By Jeremy Morrow | Jul 10, 2017
Eighteen states and the District of Columbia filed suit Thursday against Education Secretary Betsy DeVos and her department for rolling back rules designed to protect students from predatory for-profit colleges.

The "borrower defense" rules were finalized in October 2016 by the Obama administration and were scheduled to take effect July 1, a report by The New York Times said. They would have allowed student borrowers to apply for erasure of school loan debt if they were defrauded by an educational institution.

After President Trump took office, DeVos blocked implementation of the rules, saying they emerged from "a muddled process that's unfair to students and schools." She said a new rule-making committee would take a fresh look at the issue.

"Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans," said Massachusetts Attorney General Maura Healey, in the Times report. "Her decision to cancel vital protections for students and taxpayers is a betrayal of her office's responsibility and a violation of federal law."

The need for borrower defense rules, which were finalized only after years of negotion, became clear after hundreds of for-profit colleges including ITT Technical Institute and Corinthian Colleges went under amid claims of widespread fraud and other deceptive practices.

The new rules also would have banned commonly used mandatory arbitration agreements, which bar defrauded students from seeking redress in court.

DeVos rescinded the rules "without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process," reads the states' complaint, according to USA Today.

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