VA AG Mark Herring Joins Suit Against Education Secretary Betsy DeVos for Favoring Predatory, For-Profit “Schools” Over Students

WASHINGTON, D.C. (July 6, 2017) – Attorney General Mark R. Herring today joined a coalition of 19 states in suing the U.S. Department of Education and Secretary Betsy DeVos for abandoning critical federal protections for student borrowers and taxpayers that were set to go into effect on July 1, 2017.

The complaint alleges that the Department of Education violated federal law by abruptly rescinding its Borrower Defense Rule which was designed to provide relief for student borrowers and hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans. The rule was finalized by the Obama administration in November 2016 after nearly two years of negotiations, following the collapse of Corinthian Colleges, a national for-profit chain.

“The Borrower Defense Rule is a commonsense measure to keep predatory for-profit schools in check, and to provide relief when students take out loans under false pretenses,” said Attorney General Herring. “It’s a critical protection for thousands of students that cannot and should not be unilaterally dismissed by the Trump administration. More than one million Virginia student borrowers have a total of more than $30 billion in outstanding student loan balances and they should not be abandoned by the unlawful revocation of this important protection.”

Under the Borrower Defense Rule, a successful enforcement action against a school by a state attorney general entitles student borrowers to obtain loan forgiveness and enables the U.S. Department of Education to seek repayment from the school of any amounts forgiven. The Rule also limits the ability of schools to require mandatory arbitration agreements and class action waivers, which are commonly used by for-profit schools to avoid negative publicity and to thwart legal actions by students who have been harmed by schools’ abusive conduct. Without the protections of the Borrower Defense Rule, many students who are harmed by the misconduct of for-profit schools are unable to seek a remedy in court.

In May 2017, Secretary DeVos announced that the Department was “reevaluating” the Borrower Defense Rule.On June 14, the Department announced its intent to delay large portions of the Borrower Defense Rule without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process. The Department simultaneously announced its intent to issue a new regulation to replace the Borrower Defense Rule.

In a short notice published in the Federal Register, the Department cited pending litigation in the case California Association of Private Postsecondary Schools (CAPPS) v. Betsy DeVos as an excuse for delaying implementation of the Borrower Defense Rule. State attorneys general argue in their lawsuit that “the Department’s reference to the pending litigation is a mere pretext for repealing the Rule and replacing it with a new rule that will remove or dilute student rights and protections.”

Today’s complaint asks the Court to declare the Department’s delay notice unlawful and to order the Department to implement the Borrower Defense Rule.

In addition to Attorney General Herring, the lawsuit has been filed by a coalition led by Massachusetts Attorney General Maura Healey which includes the attorneys general of 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.

Previously, Attorney General Herring urged Secretary DeVos and the Department of Education to follow through on their commitment to cancel student debt for students in Virginia and around the country who were victimized by Corinthian Colleges’ practices. He has also worked with the Department of Education to notify potentially eligible students about the debt forgiveness program. Attorney General Herring’s Consumer Protection section has also secured $2.29 million in debt relief for approximately 2,000 Virginia students as part of a settlement with Education Management Corporation (EDMC) schools.