June 13, 2017

Senators Tell DeVos That Delaying Student Loan Rule Would Violate the Law

Senators Tell DeVos That Delaying Student Loan Rule Would Violate the Law

Four influential Democratic senators — Dick Durbin (IL), Patti Murray (WA), Sherrod Brown (OH), and Elizabeth Warren (MA) — have written to Secretary of Education Betsy DeVos to warn that her department cannot, without engaging in an extensive process, delay or cancel an Obama administration rule providing debt relief for defrauded students. The Senators assert that stalling on the new borrower defense rule “would be a monumental dereliction of the duty you have to protect students and taxpayers.”

In the letter, sent on Thursday, the four senators point to indications that the Department is considering a delay of the rule, which is scheduled to go into effect on July 1. The rule would create standards and procedures to implement a long-standing law cancelling the federal loans of students who are defrauded by their schools. The rule also requires financial shaky colleges to post letters of credit to ensure money will be available to student victims in the event of a collapse, and it bars colleges receiving federal dollars from denying students the right to take them to court for injuries.

The day after the senators sent their letter, 31 military and veterans organizations wrote to the Republican and Democratic leaders of the House and Senate education committees opposing any delay of the borrower defense rule. In the letter, groups including AMVETs, Vietnam Veterans of America, the Iraq Afghanistan Veterans of America, and Student Veterans of America, write, “Please urge Secretary DeVos to implement the regulation immediately and start processing veterans’ applications. Any delay is an affront to defrauded servicemembers, veterans, survivors, and military families.”  And earlier last week, 19 state attorneys general wrote to DeVos asking her Department to move ahead with existing applications for student debt relief, a process that the Trump administration appears to have put on the hold.

In their letter, the four senators note that at a June 6 hearing in federal court in Washington, addressing a lawsuit by for-profit colleges seeking to block the borrower defense rule,  a U.S. Department of Justice lawyer representing DeVos said the Education Department is “studying its options with regard to the effective date” for the new rule. In addition, Politico has reported what many in the higher education world have been hearing: that the Trump administration “has been eyeing further delays ... as it considers opening new negotiatedrulemaking sessions to rewrite” the borrower defense rule as well as another Obama rule, called gainful employment, aimed at penalizing career training programs that consistently leave students with overwhelming debt.

The senators warn that blocking the borrower defense rule “would harm thousands of students, many with crushing levels of student loan debt and few meaningful job prospects.”

They also warn that delaying or cancelling the rule would violate the law. As the senators note, the federal Higher Education Act (HEA) and Administrative Procedure Act (APA) provide that major Department of Education rules be developed through a process called negotiated rulemaking, where the Department assembles representatives of key stakeholder groups to discuss issues and provisions before the Department issues its rule.  The borrower defense rule was developed after such a process. The senators contend, accurately, that the HEA and APA “prohibit the Department from unilaterally amending or delaying a final rule except through a new negotiated rulemaking or in very narrow circumstances,” where the Department, as the relevant statute reads “for good cause finds … that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”  As the senators argue, “implementing the borrower defense rule without delay is practicable, necessary, and very clearly in the public interest.”

So, the senators tell DeVos, you may have the power to rewrite the borrower rule, but only after going through the same kind of process that the Obama administration used to create the rule.  And while you go through that process, you do not have the power to delay the current rule.

The four senators suggest that special interest pressure on, or collusion with, the Trump administration is the force that has put the borrower rule in jeopardy: “it appears that aggressive lobbying by the forprofit college industry — the very institutions that created the need for this rule by drawing down billions in taxpayer dollars and defrauding tens of thousands of their own students — may be successfully influencing policies that harm students and borrowers. Appointees with deep ties to this sector, including Mr. Robert Eitel, are reportedly advocating for this dangerous and shortsighted agenda from within the Administration itself, raising serious ethical questions. The previous employers of these appointees have a direct interest in delaying the implementation of this rule, particularly the provisions that hold institutions financially accountable to protect taxpayers and the U.S. Treasury.”

The for-profit college industry did indeed lobby relentlessly in an unsuccessful effort to block the borrower defense rule, and they continue to fight to overturn the rule.

The GOP Congress, financially in the pocket of this wealthy industry for more than a decade, could cancel both Obama rules through legislative action, but years of revelations about industry abuses have rendered the industry toxic, and perhaps lawmakers fear that voters will notice if they make a public assault on measures that protect veterans, service members, single moms and others harmed by predatory schools. Some in the industry apparently hope that delaying and then cancelling the rules through the administrative process will allow the pesky measures to be swatted away quietly behind the scenes. These four senators are now saying: Not so fast.

This article also appears on HuffPost