DeVos Sued for Limiting Student Fraud Claims Against Schools

(Bloomberg) -- The Trump administration was sued by 22 states that say a rule change narrowing the ability of students to contest federal loan repayments is a blatant handout to the for-profit school industry.

Education Secretary Betsy DeVos last year illegally rolled back protections that were put in place by Congress in 2016 to make it easier for students to challenge loan payments if they believe they were defrauded by predatory for-profit schools, the states said in a complaint filed Wednesday in federal court in San Francisco.

“The 2019 Rule brims with ill-disguised contempt for struggling students, castigating them as irresponsible, prone to making frivolous claims on pre-textual grounds, when the supposedly true source of their financial difficulties are their own poor career decisions,” the complaint says. “The true intended beneficiary of the 2019 Rule is the for-profit school industry.”

Angela Morabito, press secretary for the Department of Education, which is named in the suit along with DeVos, denied the allegations. “To any objective observer, our borrower defense rule clearly protects students from fraud, ensures they are entitled to financial relief if they suffered harm and holds schools accountable,” she said.

Along with helping students, the 2016 protections were also intended to save taxpayer money by ensuring schools would be held accountable if they engaged in misconduct like misrepresenting how many students landed good jobs after graduation.

The suit calls DeVos “hostile” to efforts to protect defrauded students.

“Under her leadership, the U.S. Department of Education has replaced critical borrower protections with a process that makes it virtually impossible for victimized students to get the relief they should qualify for,” California Attorney General Xavier Becerra said in a statement.

According to the suit, the rule change is deficient because it fails to meet a congressional mandate to specify actual borrower defenses against debt repayment and also because it was implemented in violation of administrative procedure law.

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