Attorney General Josh Stein today announced that he will sue the U.S. Department of Education and Secretary Betsy DeVos for abandoning critical student protections that were set to go into effect on July 1, 2017.
The complaint alleges that the Department of Education violated federal law by abruptly rescinding rules that would have protected student loan borrowers from predatory and deceptive practices. The rules were designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans. The rule was finalized in November 2016 after nearly two years of negotiations, following the collapse of Corinthian Colleges, a national for-profit chain which enrolled thousands of North Carolina students.
“The delayed rules are deeply troubling,” said Attorney General Stein. “Students who borrow money for their education are taking a risk to improve their lives – and they must be protected from those who take advantage of vulnerable student borrowers. Delaying these rules that protect students is irresponsible and reckless.”
Without going through the notice and public comment process required under federal law, and without seeking any comment from any stakeholder or any member of the public, on June 14 the U.S. Department of Education postponed until further notice protections that:
· Prohibit schools from forcing students to pursue complaints in arbitration rather than court;
· Prohibit schools from requiring students to waive participation in class action lawsuits; and
· Provide automatic loan forgiveness for defrauded federal student loan borrowers in several circumstances, such as when the Attorney General obtains a judgement against their former school.
Attorney General Stein wrote Secretary DeVos about that decision last month. Attorney General Stein is joined by 18 other attorneys general in filing the suit. The other states that joined the lawsuit are California, Connecticut, Delaware, Hawaii, Iowa, Illinois, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington.
