A victory for defrauded students

Ruling that lifts delay on debt relief rule is a setback for DeVos.

Students defrauded by for-profit colleges scored an important victory Tuesday, when a court cleared the way for an Obama-era policy that will make it easier for them to get their student loans forgiven.

Education Secretary Betsy DeVos had said the regulation, known as the borrower defense, made discharging loans too easy and was unfair to taxpayers. The rule was due to take effect in July 2017, but DeVos froze it while she worked on devising a new regulation.

But U.S. District Judge Randolph Moss ruled last month that DeVos’ delay was unlawful. On Tuesday, he denied a request by an organization representing forprofit colleges in California to further postpone the rule, thus paving the way for the borrower defense to enter into force.

“The rule is finally in effect. No more excuses. No more delays,” said Julie Murray, an attorney with Public Citizen, who is representing the defrauded students in their suit against DeVos.

Education Department spokeswoman Liz Hill said DeVos “respects the role of the court and accepts the court’s decision” and will soon provide information about how the regulation will be implemented.

But DeVos continues to regard the regulation as “bad policy” and will continue writing a new rule “that protects both borrowers and taxpayers,” Hill said in a statement Tuesday.

The ruling marks a significant setback for DeVos, who has made deregulating the for-profit college industry a top priority. The decision means that the Obama rule, which DeVos has fought hard to scrap, could be in effect until July 2020, when any new rule she writes would enter into force.

Under the Obama rule, students whose schools closed mid-program or shortly after completion will become eligible for automatic loan discharge. The Century Foundation, a progressive think tank, estimates that Tuesday’s decision will affect tens of thousands of attendees of more than 1,400 schools nationwide who will be eligible for $400 million in automatic debt relief.

Steve Gunderson, president of the Career Education Colleges and Universities, an industry lobbying group, called Moss’ ruling disappointing. “It will only create further confusion for students and schools,” he said.

The California Assn. of Private Postsecondary Schools, whose motion to delay the rule was denied, did not return a request for comment.