States Sue US Education Department Over Student Loan Debt Relief

18 States Are Suing Betsy De Vos Over Student Loan Protections

18 States Are Suing Betsy DeVos Over For-Profit College Rules

Officials pointed to a legal challenge out of California, from a group that represents for-profit colleges, as reasoning for the delay, Politico reported.

In May, Secretary DeVos announced the Department was reevaluating the Borrower Defense Rule.

The Department of Education was also sued by two student borrowers in the same court for delaying the rules.

"Nearly 16,000 borrower defense claims are now being processed", the Education Department said last month.

Before the changes could take effect July 1, DeVos suspended them last month and said she would convene a new rulemaking committee to rewrite the borrower defense regulation, reviving a process that took almost two years to complete. With Corinthian's breakdown, this system was overwhelmed with over 15,000 loans being wiped away totaling $247 million.

Attorneys general of 18 states, plus the District of Columbia, disagreed, saying the federal rule was the only way to regulate mostly online, for-profit colleges that draw students from all 50 states.

The District of Columbia, Commonwealth of MA, along with 17 states filed the suit in Washington, D.C., Consumer groups Public Citizen and Project on Predatory Student Lending also sued over the delaying of the program which was drafted and then finalized towards the end of former President Barack Obama's administration.

Now, 18 states are officially filing lawsuits aimed at DeVos.

But last month, DeVos said the education department wanted to re-evaluate the rule, calling it a "muddled process that's unfair to students and schools". "The loss of rights and protections also causes substantial injury to students who can not avail themselves of the rule's new streamlined process for obtaining loan discharges, and who will enroll in abusive institutions without receiving the warnings and information necessary to make an informed enrollment decision". For-profit institutions said the rules unfairly target them as applications for loan forgiveness dramatically spiked following the collapse of some high-profile institutions.

Also Thursday, two students sued the Education Department in the same federal court over the delayed rules.

In the lawsuit, filed by Washington, Massachusetts, and 17 other states today in the U.S. District Court for the District of Columbia, Ferguson argues the Department did not provide adequate justification or a notice and comment process regarding its delay of the rules.

Some predatory schools, generally concentrated in the for-profit college industry, rely on the federal student aid program.

The rule was put on hold in June, less than one month after DeVos said her agency would re-evaluate it. Other provisions banned schools from shifting students' legal complaints into mandatory arbitration, and from requiring individual resolution of claims rather than class action complaints. Data released by the Obama administration in January found that more than 800 programs across the country were failing to meet the rule's standards. Also, DeVos has frozen rules which would have required many for-profit schools to commit financial collateral to cover loan repayments, taking some of the financial burden off the federal government.

Latest News