DeVos loses law­suit over stu­dent loan for­give­ness

Judge says Ed­u­ca­tion Depart­ment’s de­lays of ‘bor­rower de­fense’ rule were im­proper.

Los Angeles Times - - BUSINESS BEAT -

Ed­u­ca­tion Sec­re­tary Betsy DeVos lost a law­suit brought by 19 states and the District of Columbia ac­cus­ing her depart­ment of wrongly de­lay­ing im­ple­men­ta­tion of Obama-era reg­u­la­tions meant to pro­tect stu­dent loan bor­row­ers from preda­tory prac­tices.

A Wash­ing­ton fed­eral court judge ruled Wed­nes­day that the depart­ment’s post­pone­ment of the so­called bor­rower de­fense rule was pro­ce­du­rally im­proper.

The case, Bauer vs. DeVos, in­cludes Cal­i­for­nia among the plain­tiffs.

The Obama ad­min­is­tra­tion cre­ated the rule in the wake of rev­e­la­tions that some for-profit col­leges en­ticed stu­dents with prom­ises of an ed­u­ca­tion and diplo­mas that would en­able them to get jobs in their cho­sen fields.

In re­al­ity, many of those cer­ti­fi­ca­tions weren’t rec­og­nized by prospec­tive em­ploy­ers, leav­ing grad­u­ates sad­dled with stu­dent loans they couldn’t re­pay.

The bor­rower de­fense reg­u­la­tions changed the rules for for­giv­ing stu­dent loans in cases of school mis­con­duct and re­quired “fi­nan­cially risky in­sti­tu­tions” to be pre­pared to cover gov­ern­ment losses in those in­stances, ac­cord­ing to U.S. District Judge Ran­dolph Moss’ 57-page rul­ing.

By post­pon­ing the ef­fec­tive date of those reg­u­la­tions, the Ed­u­ca­tion Depart­ment de­prived plain­tiffs “of sev­eral con­crete ben­e­fits that they would have oth­er­wise ac­crued,” Moss wrote. “The re­lief they seek in this ac­tion — im­me­di­ate im­ple­men­ta­tion of the Bor­rower De­fense reg­u­la­tions — would re­store those ben­e­fits.”

Writ­ing that he didn’t want to de­lay mat­ters fur­ther, Moss — a 2014 ap­pointee of then-Pres­i­dent Obama — said he will hold a hear­ing Fri­day to con­sider reme­dies.

The Depart­ment of Ed­u­ca­tion didn’t re­spond to a re­quest for com­ment.

The reg­u­la­tions were to take ef­fect July 1, 2017, but the gov­ern­ment de­layed im­ple­men­ta­tion in June of that year af­ter the Cal­i­for­nia Assn. of Pri­vate Post­sec­ondary Schools sued, chal­leng­ing the va­lid­ity of the rule.

DeVos said then that although her “first pri­or­ity” was to pro­tect stu­dents, the Obama ad­min­is­tra­tion’s rule-mak­ing ef­fort had “missed an op­por­tu­nity to get it right.”

In Oc­to­ber, her depart­ment pro­vi­sion­ally re­set the ef­fec­tive date to July 1, 2018, and then in Fe­bru­ary post­poned it again, now to July 1, 2019.

Moss ruled that all those de­lays were in­valid. He re­jected a suc­ces­sion of ar­gu­ments from gov­ern­ment lawyers, call­ing some “un­per­sua­sive” and oth­ers “un­help­ful.”

His de­ci­sion also cov­ered claims by two stu­dent bor­row­ers in a law­suit filed on their be­half by the con­sumer ad­vo­cacy group Pub­lic Cit­i­zen. The states’ suit was con­sol­i­dated with it.

Sarah L. Voisin Wash­ing­ton Post

BETSY DeVOS’ depart­ment wrongly post­poned im­ple­men­ta­tion of Obama-era reg­u­la­tions, a judge ruled.

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