The attorneys general of 22 states and the District of Columbia have filed suit against Education Secretary Betsy DeVos over her new “borrower defense” rule. The rule provides for student loan forgiveness for defrauded students.
Led by Massachusetts Attorney General Maura Healey and California Attorney General Xavier Becerra, the lawsuit asks the courts to knock down the 2019 Trump administration rule and reinstate the former 2016 regulation.
The borrower defense rule allows the Secretary of Education to discharge student debt when students were defrauded by their colleges. In 2016, the Obama administration wrote a new regulation outlining how student borrowers could get loan forgiveness after claims of fraud increased because of the now-defunct Corinthian Colleges and ITT Tech.
When DeVos came into office in 2017, she delayed the Obama administration’s 2016 rule. DeVos then rewrote the regulation and created an incredibly high standard for a burden of proof for student borrowers. Under the Obama rule, a student just needed to show a substantial misrepresentation by the school to receive relief.
The DeVos borrower defense rule makes that stricter. It defines misrepresentation as, “a statement, act, or omission by an eligible school to a borrower that is false, misleading, or deceptive; that was made with knowledge of its false, misleading, or deceptive nature or with a reckless disregard for the truth; and that directly and clearly relates to enrollment or continuing enrollment at the institution or the provision of educational services for which the loan was made.”
Those are very high standards for students to meet, making debt forgiveness unlikely for many students. According to the lawsuit, that standard is at odd with the Department’s position that misrepresentation doesn’t require proving that.
DeVos’ rule also requires students to provide evidence of financial harm. The attorneys general said that requirement is “arbitrary and onerous.” They also say the evidence requirement is unachievable and that the rule should be reversed because it is “arbitrary and capricious.”
This spring, Congress voted to overturn the rule on a bipartisan basis, but President Trump vetoed the bill. The House voted to override his veto, but could not reach the required two-thirds majority threshold. Because the override failed the rule went into effect on July 1.