18 AGs sue DeVos, cite rules freeze

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - In­for­ma­tion for this ar­ti­cle was con­trib­uted by Collin Bink­ley of The As­so­ci­ated Press and by Danielle Dou­glas-Gabriel of The Wash­ing­ton Post.

Demo­cratic at­tor­neys gen­eral from 18 states and the District of Columbia sued U.S. Ed­u­ca­tion Sec­re­tary Betsy DeVos on Thurs­day over her de­ci­sion to sus­pend rules that were meant to pro­tect stu­dents from abuse by for-profit col­leges.

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. The rules, which date from the 1990s, wipe away fed­eral loans for stu­dents whose col­leges used il­le­gal or de­cep­tive tac­tics to get them to bor­row money to at­tend.

Pres­i­dent Barack Obama’s ad­min­is­tra­tion re­vised the

rules last year to sim­plify the claims process and shift more of the cost of dis­charg­ing loans onto schools. The re­vised rules were sched­uled to take ef­fect Satur­day.

DeVos, in her an­nounce­ment saying the rules would be de­layed and rewrit­ten, said they cre­ated “a mud­dled process that’s un­fair to stu­dents and schools.”

Ed­u­ca­tion Depart­ment spokesman El­iz­a­beth Hill called the law­suit by at­tor­neys gen­eral “ide­o­log­i­cally driven” and said the now-de­layed rules suf­fered from “sub­stan­tive and pro­ce­dural flaws” that need to be ad­dressed.

“That is why the Sec­re­tary de­cided it was time to take a step back and hit pause on these reg­u­la­tions un­til this case has been de­cided in court and to make sure these rules achieve their pur­pose: help­ing harmed stu­dents,” Hill said in a state­ment.

But con­sumer ad­vo­cates and lib­eral law­mak­ers say the Obama-era changes achieve ex­actly that by speed­ing up loan dis­charges and hav­ing col­leges foot more of the bill.

To limit fi­nan­cial risk to tax­pay­ers, the new rules were to ex­pand the con­di­tions un­der which col­leges have to get a let­ter of credit from a bank as­sur­ing the avail­abil­ity of at least 10 per­cent of the to­tal amount of fed­eral fi­nan­cial aid funds it re­ceives. Among the cir­cum­stances that would trig­ger a let­ter are law­suits filed by fed­eral agen­cies, de­faults on debt obli­ga­tions and en­force­ment ac­tion taken by an ac­cred­i­ta­tion agency.

“For al­most two years, we worked with other state [at­tor­neys gen­eral], schools, lenders, the depart­ment, a va­ri­ety of stake­hold­ers to come up with a rule that would pro­tect stu­dents and en­sure that schools and tax­pay­ers would be treated fairly,” said Mas­sachusetts At­tor­ney Gen­eral Maura Healey, who is lead­ing the law­suit against DeVos.

The rules also would have for­bid­den schools from forc­ing stu­dents to sign agree­ments that waive their right to sue. De­frauded stu­dents would have faced a quicker path to get their loans erased, and schools, not tax­pay­ers, could have been held re­spon­si­ble for the costs.

A fi­nal ver­sion of the rules was an­nounced last fall after nearly two years of ne­go­ti­a­tions. The Obama ad­min­is­tra­tion started pur­su­ing new rules after the Corinthian Col­leges chain shut down in 2015 after al­le­ga­tions of mis­con­duct, lead­ing to a flood of ap­pli­ca­tions from stu­dents seek­ing to get their loans for­given.

Healey said the reg­u­la­tion was a “com­mon-sense mea­sure” meant to pro­tect stu­dents.

“Since day one of [Pres­i­dent Don­ald Trump’s] ad­min­is­tra­tion, Sec­re­tary of Ed­u­ca­tion Betsy DeVos and the ad­min­is­tra­tion have sided with for-profit schools over stu­dents,” Healey told re­porters. “For me and my col­leagues, it’s sim­ple: When stu­dents and fam­i­lies are cheated out of an ed­u­ca­tion and tax­pay­ers foot the bill, ev­ery­body loses.”

Healey added: “It’s im­por­tant that stu­dents have their day in court. All as­pects of this rule are im­por­tant and I’m con­cerned about any ac­tion to un­der­mine or strip any of what’s in the bor­rower rule.”

AGENCY CITES LAW­SUIT

The law­suit says DeVos and the Ed­u­ca­tion Depart­ment failed to take legally re­quired steps to de­lay al­ready es­tab­lished rules. It says they failed to open the de­ci­sion to pub­lic com­ment and failed to pro­vide an ad­e­quate le­gal jus­ti­fi­ca­tion for de­lay­ing the rules, among other faults.

In June, the Ed­u­ca­tion Depart­ment said it was de­lay­ing the rule be­cause a fed­eral court was weigh­ing a law­suit filed by a Cal­i­for­nia trade group made up mostly of for-profit col­leges seek­ing to block the rules. The depart­ment cited a law al­low­ing such a de­lay for lit­i­ga­tion if it is de­ter­mined “that jus­tice so re­quires.”

The at­tor­neys gen­eral said that jus­ti­fi­ca­tion is “a mere pre­text” for re­peal­ing and re­plac­ing the reg­u­la­tion.

The other states that joined the law­suit are Cal­i­for­nia, Con­necti­cut, Delaware, Hawaii, Iowa, Illi­nois, Mary­land, Min­nesota, New Mex­ico, New York, North Carolina, Ore­gon, Penn­syl­va­nia, Rhode Is­land, Ver­mont, Vir­ginia and Wash­ing­ton.

Last week, a group of 47 Democrats in Con­gress, along with in­de­pen­dent Sen. Bernie San­ders of Ver­mont, sent a let­ter to DeVos op­pos­ing the de­lay, saying the depart­ment had never used lit­i­ga­tion as a rea­son to de­lay rules.

A separate law­suit against the Ed­u­ca­tion Depart­ment was filed Thurs­day on be­half of two for­mer stu­dents of a Bos­ton-area for-profit col­lege. The suit says the stu­dents were count­ing on pro­tec­tions in the new rules to sue the New Eng­land In­sti­tute of Art, which they say de­ceived them and left them with few job prospects and heavy debt. The school’s par­ent com­pany did not im­me­di­ately com­ment.

“Sec­re­tary Betsy DeVos has ef­fec­tively re­voked stu­dents’ rights un­der the rule while giv­ing a pass to preda­tory schools that wield in­flu­ence with this ad­min­is­tra­tion,” said Julie Mur­ray, an at­tor­ney for Pub­lic Cit­i­zen, a lib­eral think tank in Wash­ing­ton that’s rep­re­sent­ing the stu­dents.

The law­suits set up a le­gal bat­tle that has been brew­ing out­side the courts for months. Ad­vo­cacy groups and some con­gres­sional Democrats have been gear­ing up for a fight to pre­serve Obama-era rules that were in­tended to hold for-profit col­leges ac­count­able, while the Trump ad­min­is­tra­tion has sought to roll back reg­u­la­tions it sees as bur­den­some.

“Betsy DeVos is bend­ing over back­wards to make it eas­ier for fly-by-night schools to cheat stu­dents and bury them in moun­tains of debt,” Sen. El­iz­a­beth War­ren, D-Mass., said in a state­ment Thurs­day. “Sec­re­tary DeVos might not like it, but her job is to serve stu­dents — and we will make sure she does.”

Last Fri­day, DeVos said she also was sus­pend­ing the new “gain­ful em­ploy­ment” rule, an­other hall­mark of the Obama ad­min­is­tra­tion that was set to take ef­fect in July. The reg­u­la­tion would have cut off fed­eral fund­ing to ca­reer pro­grams that con­sis­tently left stu­dents with more debt than they could af­ford. 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.

Trump, who nom­i­nated DeVos, ran into trou­ble with his own for-profit Trump Univer­sity. The now-closed school agreed in March to pay $25 mil­lion to set­tle a class-ac­tion law­suit that af­fected about 3,700 for­mer stu­dents.

AP/SU­SAN WALSH

Ed­u­ca­tion Sec­re­tary Betsy DeVos tes­ti­fies on Capi­tol Hill last month. DeVos’ de­ci­sion to sus­pend rules meant to pro­tect stu­dents from abuses by for-profit col­leges drew a law­suit Thurs­day.

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