18 States Sue DeVos, Education Department Over Student Loan Move

  • 18 states sue Education Department for shelving regulations
  • Filing comes amid flurry of suits over Obama-era provision

Betsy DeVos, U.S. secretary of education, speaks during a House subcommittee hearing in Washington on May 24, 2017.

Photographer: Zach Gibson/Bloomberg

Education Secretary Betsy DeVos’s decision to put regulations designed to protect student borrowers on hold triggered a lawsuit from attorneys generals in 18 states and the District of Columbia who want it implemented.

In a complaint filed Thursday in a Washington federal court, the coalition said DeVos’s department improperly delayed parts of the Borrower Defense Rule instead of engaging in the formal process of revamping or rescinding it, as required by law. The measure was to take effect July 1.

“The rule deters institutions from engaging in predatory behavior and restores the rights of students injured by a school’s misconduct,” the attorneys general said in the complaint. They asked the court to declare the department’s delay unlawful and order the rule be implemented “promptly.”

The lawsuit comes three days after a U.S. appeals court in Washington rebuked the Environmental Protection Agency for unilaterally delaying Obama-era methane regulations, while the Trump-era EPA, led by former Oklahoma Attorney General Scott Pruitt, reviewed them.

President Barack Obama’s administration created the Borrower Defense Rule in the wake of revelations that some for-profit colleges enticed students with promises of an education and diplomas that would allow 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.

‘Regulatory Reset’

In announcing the delay last month, DeVos said that while her “first priority is to protect students,” the prior administration’s rule-making effort “missed an opportunity to get it right.” In support of her decision, she referenced a Washington federal court lawsuit challenging the measure, filed in May by the California Association of Private Postsecondary Schools.

“The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs,” the secretary said. “It’s time for a regulatory reset.”

The states challenging her decision include California, Connecticut, Illinois, Massachusetts, New York, Pennsylvania and Virginia. Education Department Press Secretary Liz Hill called the lawsuit “ideologically driven.”

“The state attorneys general are saying to regulate first, and ask the legal questions later,” she said in a statement. That’s what the Obama administration did, failing to account for the interests of all stakeholders, she said.

Hill said the regulations would cost American taxpayers almost $15 billion over the next decade, with the government having to forgive loans.

Earlier Thursday, two individual borrowers sued DeVos in the same court, making related claims. Julie Murray, an attorney for the borrowers with the Public Citizen Litigation Group in Washington, said the Education Department’s and EPA’s actions were politically related.

“The actions at issue in the case we filed today and the D.C. Circuit’s decision this week fit into a pattern we’re seeing across agencies,” she said. The Trump administration is “looking for ways not to enforce valid regulations that are on the books and that were adopted by the Obama administration.”

The states’ case is Commonwealth of Massachusetts v. U.S. Department of Education, 17-cv-01331, U.S. District Court, District of Columbia (Washington). The individuals’ case is Bauer v. DeVos, 17-cv-1330, U.S. District Court, District of Columbia (Washington).

    Before it's here, it's on the Bloomberg Terminal.