Betsy DeVos loses lawsuit after delaying student loan protection rule

CNN/Stylemagazine.com Newswire | 9/13/2018, 12:34 p.m.
A federal judge ruled that the Betsy Devos-led Department of Education improperly delayed implementing a rule to give some student ...
U.S. Secretary of Education Betsy DeVos

By Katie Lobosco

(CNN) -- A federal judge ruled that the Betsy Devos-led Department of Education improperly delayed implementing a rule to give some student loan borrowers relief.

U.S. District Judge Randolph Moss sided with attorneys general from 18 states and the District of Columbia who sued Education Secretary Betsy DeVos after she froze an Obama-era rule known as Borrower Defense to Repayment. The rule is intended to help students receive debt forgiveness if they were cheated by their college.

It was rewritten under the Obama administration in the wake of the collapse of Corinthian College, a for-profit school that misled prospective students with inflated job placement numbers. More than 130,000 borrowers have applied for debt forgiveness since 2015, a majority of whom attended for-profit colleges.

"Today's decision in federal court is a victory for every family defrauded by a predatory for-profit school and a total rejection of President Trump and Betsy DeVos's agenda to cheat students and taxpayers," said Massachusetts Attorney General Maura Healey, who led the coalition.

The rule was due to take effect in July, but DeVos delayed the implementation after a group representing for-profit colleges in California sued the Department of Education seeking to block it from taking effect.

A spokesperson for DeVos said the department is reviewing the ruling.

Moss found the department's argument for delaying the rule "procedurally defective" and said it "was arbitrary and capricious." In his 57-page opinion, he wrote that some of the department's legal rationales "lack any meaningful analysis."

But the order does not instruct the department to immediately reinstate the rule. Instead, a hearing will be held Friday to discuss remedies.

Under DeVos, the Department of Education has worked on a re-write of the rule, set to go into effect in July 2019. The new version was blasted by consumer groups who said student borrowers would be required to submit more evidence of their school's misconduct and prove more difficult facts in order to get debt relief.

Department of Education documents show that DeVos's rewrite could save the government $12.7 billion over a ten-year period compared with the Obama version.

DeVos is rolling back another Obama-era regulation that was designed to withhold funding for for-profit schools and certificate programs that failed to prepare students for "gainful employment." Together, the two rules were an important part of the Obama administration's crackdown on for-profit colleges.