Following Education Secretary Betsy DeVos' decision to "reset" new regulations put in place to protect students at for-profit colleges, two separate lawsuits now accuse the Secretary of breaking federal law by running roughshod over the regulatory process when she delayed the so-called Borrower Defense rule, which would have made it easier for defrauded students to get out from under their student loan burdens.
In a separate lawsuit Thursday, Public Citizen and the Project on Predatory Student Lending sued the department over the borrower-defense delay on behalf of two students who attended the for-profit New England Art Institute in MA. Eighteen states are suing the department over delays in implementing a rule protecting students at for-profit colleges. In May, the California Association of Private Postsecondary Schools filed a federal lawsuit to block the borrower defense rules from going into effect.
In addition to providing relief for students, the rule would also empower the Department of Education to seek money from schools where loans were forgiven. They argue that the Education Department can not stop enforcing existing regulations that don't align with their philosophy without due process.
The overhauled borrower defense rule, authorized November 1 by the Obama administration and scheduled to take effect this month, followed a wave of shutdowns by for-profit school chains, including giants ITT Technical Institute and Corinthian Colleges Inc., that left students at campuses in New Mexico and across the nation with what many thought were useless degrees - or thousands of dollars worth of debt and no degree. The state of California won a judgment of more than $1 billion against Corinthian a year ago for misleading students in its advertising. The exponential growth of the for-profit sector has left millions of former students with unmanageable student loan debt borrowed in service of a credential they were not able to obtain or that provides little or no value.
Elisabeth Dee DeVos is an American businesswoman, politician, and activist who is the 11th and current United States Secretary of Education.
Attorneys general for 18 states and Washington, D.C., have filed a federal lawsuit against Education Secretary Betsy DeVos for delaying new rules created to help protect student borrowers who are defrauded by colleges.
Madigan and 18 other Democratic attorneys general announced the suit Thursday, alleging DeVos and the Department of Education violated federal law and abandoned "critical federal protections" for students that were set to take effect this month.
At the same time, DeVos herself reportedly had problems with the borrower defense rule because it "puts taxpayers on the hook for significant costs" with the Obama administration estimating the program would cost $16.6 billion over 10 years.
The Obama administration introduced the new rules following accusations that hundreds of for-profit colleges had defrauded students. And weeks later, in mid-June, the Education Department announced it would indefinitely delay large portions of the rule. Elizabeth Hill, a spokeswoman for the Education Department, said the suit brought by the attorneys general was "ideologically driven".
The pause also makes it harder - if not impossible - for students to sue schools they accused of fraud.
"These safeguards for students to protect them from abuse by for-profit higher education institutions are being abandoned by the very federal agency that should be enforcing them", Shapiro added.
According to the lawsuit, for-profit schools aggressively recruit students who qualify for federal student loans, disproportionally targeting low-income, minority and unemployed students, as well as veterans.
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