States, consumer groups sue Betsy Devos over delay on student-loan protections

The lawsuit follows a separate suit filed by two consumer-organizations over the same issue.
By Lucas Rowe | Jul 10, 2017
Education Secretary Betsy Devos was sued by 19 state attorneys-general Thursday over her delay on implementing regulations meant to protect student-loan borrowers whose schools had defrauded them. The lawsuit follows a separate suit filed by two consumer-organizations over the same issue.
"Borrower defense to repayment," as the regulations are known, are meant to make it easier for students whose schools defrauded them to seek debt forgiveness. They also prohibit schools from requiring students to resolve their grievances against the schools outside of court.
The Obama administration had approved the regulations and scheduled them to take effect on July 1 of this year. But the Trump administration issued a delay on implementation last month, citing a legal challenge by a California association that represents for-profit colleges. Devos personally criticized the regulations at the time as "a muddled process that's unfair to students and schools, and puts taxpayers on the hook for significant costs." The Education Department said that it will issue a rewritten version of the regulations later this year.
Massachusetts filed the first lawsuit in conjunction of attorneys-general from the following states: 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. Massachusetts' attorney general, Maura Healey, said in a statement that Devos' opposition to the regulations is simply an acquiescence to the demands of the for-profit college industry at the expense of student borrowers.
"Since Day One, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans," Healey said. "Her decision to cancel vital protections for students and taxpayers is a betrayal of her office's responsibility and a violation of federal law."
Public Citizen and Harvard Law School's Project on Predatory Student Lending filed the other lawsuit on behalf of two former students who say that the New England Institute of Art, which is owned by Education Management Corporation, swindled them into spending thousands of dollars for worthless degrees. The students wish to sue the school but cannot because the school had required them to sign an agreement to resolve any complaints through arbitration outside court.

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