Tom Perez on DeVos Delaying Student Loan Protections

In response to the announcement that 19 Democratic State Attorneys General filed suit against the U.S. Department of Education and Secretary Betsy DeVos for abandoning critical federal protections for student borrowers, DNC Chair Tom Perez issued the following statement:

“Democrats believe that we should invest in our students by fighting to ensure they have access to an affordable education. Instead of standing up for students drowning in debt, Secretary DeVos has chosen to delay vital protections that hold institutions accountable for abusive practices that cheat students and taxpayers out of billions of dollars in federal loans. I applaud these Democratic State Attorneys General for standing up to protect our students and share Massachusetts Attorney General Maura Healey's view that DeVos’ decision to cancel these protections is ‘a betrayal of her office’s responsibility.’

“As Attorney General Healy also stated, it has become an unfortunate trend with DeVos and the Trump administration of consistently siding with for-profit school executives against students and families. This decision will not only hurt students, but it will also hurt our country by holding back the next generation of innovators, business owners and educators. Simply put, we deserve better.”

See below for the full release from the Democratic Attorneys General Association:

For Immediate Release: July 6, 2017

Media Contact: Zoe Sheppard, zoe.sheppard@berlinrosen.com202-800-8167


Lawsuit Filed Against Education Secretary DeVos for Delaying Rules That Protect Students and Taxpayers from Abuse by Predatory For-Profit Schools

WASHINGTON, D.C. – Today, a coalition of 18 states and Washington, D.C. joined together in suing the U.S. Department of Education and Secretary Betsy DeVos for abandoning critical federal protections that were set to go into effect on July 1, 2017. 

The complaint, filed by Massachusetts Attorney General Maura Healey in U.S. District Court, alleges that the Department of Education violated federal law by abruptly rescinding its Borrower Defense Rule which was designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans. The rule was finalized by the Obama administration in November 2016 after nearly two years of negotiations, following the collapse of Corinthian Colleges, a national for-profit chain.

“The final rules aim to hold accountable those schools that are engaging in predatory behavior through deceptive actions,” said Sean Rankin, Executive Director of the Democratic Attorneys General Association. “Secretary DeVos is self-serving and taking taxpayer dollars to support her industry and interests while turning her back on students.  She and her friends stand to gain by blocking implementation of the regulations against those private interests that take advantage of our students, many of whom are veterans, and all taxpayers.”

In May 2017, Secretary DeVos announced that the Department was reevaluating the Borrower Defense Rule. On June 14, the Department announced its intent to delay large portions of the Borrower Defense Rule without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process. The Department simultaneously announced its intent to issue a new regulation to replace the Borrower Defense Rule.

In a short notice published in the Federal Register, the Department cited pending litigation in the case California Association of Private Postsecondary Schools (CAPPS) v. Betsy DeVos as an excuse for delaying implementation of the Borrower Defense Rule. State attorneys general argue in their lawsuit that “the Department’s reference to the pending litigation is a mere pretext for repealing the Rule and replacing it with a new rule that will remove or dilute student rights and protections.”

Last month, a coalition of attorneys general filed a motion to intervene in the CAPPS case in order to defend students and taxpayers from the challenge to the Borrower Defense Rule brought by the plaintiffs – a trade association representing many for-profit schools.

Additionally, without the protections of the current Borrower Defense Rule, many students who are harmed by the misconduct of for-profit schools are unable to seek a remedy in court. The Borrower Defense Rule limits the ability of schools to require students to sign mandatory arbitration agreements and class action waivers, which are commonly used by for-profit schools to avoid negative publicity and to thwart legal actions by students who have been harmed by schools’ abusive conduct.

Today’s complaint asks the Court to declare the Department’s delay notice unlawful and to order the Department to implement the Borrower Defense Rule.

The Department of Education’s negotiated rulemaking committee helped develop the Borrower Defense Rule – in large part as a result of state and federal investigations into for-profit schools such as Corinthian Colleges. Under the rule, a successful enforcement action against a school by a state attorney general entitles borrowers to obtain loan forgiveness, and enables the Department of Education to seek repayment of any amounts forgiven from the school. 

The coalition involved in today’s lawsuit, led by AG Healey, include the attorneys general of Massachusetts, California, Connecticut, Delaware, Hawaii, Iowa, Illinois, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia.