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Lawsuits & Litigation

Democratic Attorneys General Sue Education Secretary Betsy DeVos on New Loan Forgiveness Rules

— July 16, 2020

Democratic attorneys general from more than 20 states have filed a lawsuit against Department of Education Secretary Betsy DeVos, who implemented policies making it difficult for student loan borrowers to have their balances forgiven.

According to TIME, DeVos’s reforms are unpopular among loan recipients and legislators alike. Congress had previously voted to strike down DeVos’s loan forgiveness revisions; however, President Donald Trump used his veto authority to support his Education secretary.

The lawsuit—led by the attorneys general of California and Massachusetts—represents 22 states, as well as the District of Columbia.

Altogether, the attorneys general claim that DeVos has violated federal rules by issuing policies without proper cause. Furthermore, they say the new, scaled-down forgiveness program does not provide a clear, adequate process for students who were defrauded by predatory, for-profit colleges and universities.

DeVos—as LegalReader’s reported many times before—has frequently been accused of protecting for-profit schools from legal scrutiny. In a press call with reporters, California Attorney Xavier Becerra suggested that DeVos intentionally moved to protect such institutions’ profits.

“They rigged the system against students, flat and simple,” Becerra said.

NBC News notes that DeVos’s attacks on student loan forgiveness programs are varied. In the past, DeVos attempted to delay the implementation of an Obama-era amendment to the Borrower Defense to Repayment rules.

In their original form, the rules entitle borrowers to have their loans forgiven if the educational institution they attended was found to have committed state or federal law. The Obama-era update included additional guidance—it, for instance, prohibited schools from forcing their students to sign away their rights to file or participate in a class action.

In 2018, a federal judge found DeVos’s attempts to delay the rules from taking effect “unlawful,” “arbitrary and capricious.”

And under DeVos’s direction, the Department of Education has outright refused to cancel the student loans of tens of thousands of borrowers who had already qualified or met the criteria for relief.

Here, again, DeVos’s actions were found unlawful, with Education fined an additional $100,000 by the courts.

Now, the attorneys general say that DeVos is advancing an even crueler tactic: telling borrowers they qualify for loan relief, then refusing to authorize any monetary amount for the same.

The tactic—outrageous as it may sound—works. And that’s because, under DeVos, the department now forces students to prove they were not only misled by predatory, for-profit schools, but that such schools misled students knowingly.

“A school may misrepresent the job of earnings prospects of its graduate, the likelihood of completing its programs, even the vocational licensing requirements of state law—but a borrower cannot assert these misrepresentations as a defense unless he or she can prove that the school did not simply make a mistake,” the lawsuit observes.

The Department of Education has also purportedly attempted to clear its backlog of loan forgiveness applications by denying as many as possible. TIME notes that, in April, DeVos settled another federal lawsuit by pledging that the agency would process its backlog of 170,000 fraud and loan forgiveness claims within 18 months.

To date, though, Education still has nearly 128,000 pending applications. And of all those processed—some 100,000, in total—nearly half have been rejected.


23 Attorneys General Sue Betsy DeVos to Repeal Overhaul of Student Loan Forgiveness Program

Betsy Devos’ refusal to honor student loan forgiveness shows her disrespect for the law

Judge rules DeVos delay of Obama-era student loan rules ‘unlawful’

Opinion: Michigan v. DeVos is more than just a lawsuit

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