(MENAFN - Gulf Times) Democratic attorneys general in 18 states and the District of Columbia yesterday filed a lawsuit against Betsy DeVos, Donald Trump's controversial choice for education secretary, over her decision to suspend rules meant to protect students from abuses by for-profit colleges.
Massachusetts attorney general Maura Healey, leading the lawsuit, said DeVos's decision was 'a betrayal of her office's responsibility and a violation of federal law.
The lawsuit was filed in federal court in Washington DC and demands implementation of borrower defence to repayment rules.
The rules were created under Barack Obama's administration and were meant to take effect on July 1. They aim to make schools financially responsible for fraud and forbid them from forcing students to resolve complaints outside court.
On June 14, DeVos announced the rules would be delayed and rewritten, saying they created 'a muddled process that's unfair to students and schools and puts taxpayers on the hook for significant costs.
In a statement yesterday, Healey said: 'Since day one, secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans. Her decision to cancel vital protections for students and taxpayers is a betrayal of her office's responsibility and a violation of federal law.
A spokeswoman for DeVos told media the secretary would not immediately comment.
Also yesterday, two student borrowers sued the education department in the same federal court over the delayed rules.
The students both attended the New England Institute of Art in Brookline, Mass., a for-profit school that stopped enrolling new students in 2015. Its parent company, Education Management Corporation, agreed that year to pay $95mn to settle a government lawsuit charging the company with making illegal payments to recruiters.
The Obama administration's push to streamline and expand the borrower defence process came after hundreds of for-profit colleges were accused of widespread fraud and collapsed, leaving their enrolled students with huge debts and no degrees. The failure of two mammoth chains, Corinthian Colleges and ITT Technical Institute, gave the issue added urgency.
An existing federal law allows borrowers to apply for loan forgiveness if they attended a school that misled them or broke state consumer protection laws. Once rarely used, the system was overwhelmed by applicants after the wave of for-profit failures. Corinthian's collapse alone led to more than 15,000 loan discharges, with a balance of $247mn.
Taxpayers get stuck with those losses. The rules that DeVos froze would have shifted some of that risk back to the industry by requiring schools at risk of closing to put up financial collateral. They would also ban mandatory arbitration agreements, which have prevented many aggrieved students from suing schools that they believe have defrauded them.