State sues feds over student loan relief
California Attorney General Xavier Becerra sued the Trump administration Wednesday, challenging a revised rule he charged would make it harder for students to get loan relief from predatory lenders and forprofit colleges.
“The U.S. Department of Education has replaced critical borrower protections with a process that makes it virtually impossible for victimized students to get the relief they should qualify for,” including canceling their federal loans, Becerra said in announcing the lawsuit.
He was joined in the suit by 22 other state attorneys general, all of them Democrats.
“This is yet another grandstanding, politically driven lawsuit meant to grab a cheap headline,” said Angela Morabito, the Education Department’s press secretary. “To any objective observer, our borrower defense rule clearly protects students from fraud, ensures they are entitled to financial relief if they suffered harm and holds schools accountable.”
Education Secretary Betsy DeVos revised the rule for the federal Borrower Defense to Repayment student loan relief program in August, saying Obamaera regulations “just weren’t working” and that the change “corrects the wrongs of the 2016 rule through common sense and carefully crafted reforms.”
DeVos has said the Obama administration’s rule on the loans was a toolenient giveaway for students.
“While students should have protections from predatory practices, schools and taxpayers should also be treated fairly,” she said in a 2017 talk to a Michigan Republican group. “Under the previous rules, all one had to do was raise his or her hands to be entitled to socalled free money.”
The new rule establishes a threeyear deadline for student borrowers to seek loan relief and makes it tougher for students to prove they relied on false claims by a school to enroll and seek a loan. It also saves the federal government an estimated $11.1 billion in loan guarantee costs.
“We’re suing because this rule is nothing more than a free pass to allow schools to continue defrauding students,” said Massachusetts Attorney General Maura Healey, who joined Becerra in a telephone news conference announcing the suit. The court action seeks to reinstate the Obamaera rule.
The suit pits Becerra against President Trump, who in May vetoed a bipartisan measure passed by Congress that would have dumped the new revision and left the previous rule intact.
Trump called the measure “a misguided resolution,” saying former President Barack Obama’s regulation had forced forprofit colleges to close and kept students from choosing the kind of education they want and need.
The suit is designed to provide students with the protection they aren’t receiving from the administration, Becerra said.
“Secretary DeVos puts students and those who borrowed money in good faith ... behind the predatory lenders who have exploited them,” he said.
The new rule applies to all student loans made on or after July 1, 2020.