States sue Trump administration for easing scam student loan borrowers


On Wednesday, a coalition of attorneys general sued Education Secretary Betsy DeVos over a rule regarding fraudulent student loan borrowers. (Photo by Alex Wong / Getty Images)

Alex Wong / Getty Images

A coalition of 23 attorneys general on Wednesday sued Education Secretary Betsy DeVos and the Department of Education, alleging that the Trump administration was illegally limiting aid to fraudulent student loan borrowers.

The lawsuit, led by California Attorney General Xavier Becerra and Massachusetts Attorney General Maura Healey, centers on the “borrower’s defense” rule, a law that allows student loan borrowers who say they have been misled. misled by their schools to be discharged of their federal student debt.

The coalition of state law enforcement officials accuses the DeVos-era Department of Education of illegally repealing a version of the borrower defense rule implemented by the Obama administration in 2016 and replace it with an industry-friendly version to the detriment of borrowers.

“Once again, Secretary DeVos and the Department of Education have decided to put students and those who have borrowed money in good faith behind the protection of predatory for-profit institutions,” Becerra said during ‘a call with journalists.

On the books since the 1990s, but rarely used until 2015

The lawsuit is the latest development in a multi-year battle over the borrower’s defense rule. In the books since the 1990s, the rule was rarely used until 2015, when former for-profit students started crying out for relief.

These students had attended institutions such as Corinthian Colleges and ITT Technical Institute – large, publicly traded chains that filed for bankruptcy in the midst of allegations they tricked students into taking out loans with inflated placement and graduation rates. Meanwhile, borrowers indebted to these schools were still left with their loans and a diploma of little value in the labor market.

In response to pressure from activists and these borrowers, the Obama administration created a streamlined process that scammed students could use to get relief. But the Trump administration has tried to avoid implementing the Obama-era version of the rule, arguing that it was “an overrun”.

Education Ministry spokesperson Angela Morabito wrote in an emailed statement that the agency’s borrower defense rule “clearly protects students from fraud, ensures they are entitled to a financial aid in the event of harm and holds schools accountable ”. She added: “This is another high profile, politically motivated trial destined to grab headlines at low cost, and the media always seems to oblige.

Announcing his agency’s version of the rule in December, DeVos said the ministry “would not tolerate furiously giving taxpayer money to those who submitted a bogus claim or who are not eligible for relief.” The agency said its version of the rule would save taxpayers $ 11 billion over 10 years. The Department faced several pursuits on its approach to defending the borrower.

DeVos version of rule makes debt cancellation ‘virtually impossible’, advocates say

The 2019 borrower defense rule has increased the burden of proof for borrowers seeking to cancel their debt under the law. For example, borrowers must prove that they have suffered financial harm as a result of their school’s actions. In this and other ways, the rule “puts so many barriers” that it is “next to impossible” for a borrower to successfully pay off their debt, Healey said during the call with the debtors. journalists.

In some cases where the agency has acknowledged that borrowers have been defrauded by their schools, it has unloaded a small fraction of their debt and even not at all.

Earlier this year, a bipartisan coalition of lawmakers voted to repeal the borrower defense rule of 2019 and revert to the Obama-era version. Corn Trump vetoed the bill and Democrats failed to muster enough votes to override the veto. As a result, the DeVos-era version of the rule went into effect on July 1.

And now, as Healey said, “Here we are. ”

“We are back in court because we have witnessed the heartbreaking devastation for borrowers and their families,” she told reporters. “It’s about responsibility, fairness and getting the relief these students deserve. “


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