February 19, 2020

Student Advocates Again Challenge DeVos in Court For Trashing Obama-Era Rules

Student Advocates Again Challenge DeVos in Court For Trashing Obama-Era Rules

Trump education secretary Betsy DeVos has trashed two key rules that the Department of Education, during the Obama administration, painstakingly developed to discourage for-profit colleges from deceiving and abusing their own students. With a new lawsuit filed today, advocates for students are now in court fighting to cancel both of the DeVos anti-rules and keep the previous Department regulations in place.

Lawyers from Public Citizen Litigation Group and the Harvard Project on Predatory Student Lending this morning filed a federal lawsuit in Manhattan on behalf of the New York Legal Assistance Group, which represents, among others, low-income students who attended predatory for-profit colleges. The suit aims to invalidate the Trump-DeVos Borrower Defense rule, which overruled the Obama-era borrower defense rule.

The Obama borrower rule at last gave former students a fair shot at having their federal student loans cancelled where their school, carrying the Department of Education seal of eligibility for federal aid, engaged in deceptive or abusive behavior. The Obama rule also prohibited schools that get such federal aid from denying injured students the right to sue for damages in court.

These Obama-era reforms did not come close to making whole the injured students, who would not get back hundreds of hours devoted to their low-quality educations, or the money paid out of their own pockets or still owed for high-interest non-government loans. But the reforms did something to help students — and to highlight the worst school offenders.

The Trump-DeVos borrower rule reversed all those reforms, and would make it nearly impossible for injured students to get their debts cancelled.

The new borrower defense lawsuit comes in the wake of a separate suit, filed in January in San Francisco by the non-profit law firm Student Defense on behalf of the American Federation of Teachers and members of that union. That suit challenges DeVos’s action in deleting entirely another Obama rule called Gainful Employment, which would cut off federal grants and loans to the worst-of-the-worst for-profit and career college programs — those that consistently leave graduates with far more debt than they can possibly afford to repay on the salaries they earn. The rule was starting to work, pushing for-profit schools to lower prices and eliminate particularly poor-performing programs of study.

The challenge in each of the two lawsuits is to convince the courts that the DeVos rules are arbitrary, not based on evidence, or inconsistent with existing law.  DeVos and her team, through their own missteps, have made that challenge somewhat easier.

DeVos, guided by top political aides who previously worked at predatory colleges, has rushed to eliminate accountability for school abuses, and she published both of her anti-rules based on faulty reasoning and without sufficient evidence.

DeVos has repeatedly suggested, and has seemed to base her policies on the theory that, it is the students, not the schools, who are motivated to engage in fraudulent behavior, but she’s presented no evidence of that, while there are mountains of evidence and numerous law enforcement actions showing schools have been engaged in deceptions and frauds.

DeVos’s department, moreover, has admitted that the Obama-era gainful employment rule would save taxpayers $6.2 billion over ten years by cutting off aid to badly-performing schools. The Obama borrower defense rule would be more expensive than DeVos’s initially — because it would, justly, cancel debts owed by ripped off students — but it, too, would save taxpayers billions in the long run, by creating financial pressures on the Department of Education to remove bad-acting schools from the federal aid program.

In addition, in both rulemaking proceedings, as well as in a subsequent rulemaking on college accreditation, the DeVos Department stacked the deck to disfavor advocates for students and favor lobbyists for predatory colleges.

Last month, the House of Representatives passed a resolution to overturn the DeVos borrower defense rule, and six Republicans joined Democrats in voting for it. Now, Senate Democratic leader Chuck Schumer (NY), along with Senator Dick Durbin (D-IL), are pushing hard to find Republican allies in the Senate to pass the same measure. The resolution has strong support from veterans groups; American Legion National Commander James W. “Bill” Oxford has written a letter saying the DeVos version of the rule is “fundamentally rigged against defrauded borrowers of student loans.” But the White House has indicated that Trump would veto the resolution.

Public Citizen and the Harvard Project on Predatory Student Lending already have won repeated court victories against DeVos on borrower defense, with judges compelling her to follow the law and implement the existing Obama rule. Those wins, and the powerful complaints filed in the two new lawsuits, are a testament to the leadership and skill of those groups and of Student Defense, and to charitable foundations that have made strategic investments to support pro-student litigation. (Disclosure: I am on the board of directors of Public Citizen Foundation, I was once a consultant to the Harvard project, and I have worked closely with all three groups.)

This strengthened pro-student legal capacity is making a huge difference. When the Obama education department issued its first version of the gainful employment rule, and the for-profit college industry sued to strike it down, our coalition of pro-student groups lacked the resources to file a friend-of-the-court brief laying out the evidence of fraud and abuse in the industry. The Justice Department filed fairly tepid, technical briefs defending the rule, and a federal judge found his own technical reasons to invalid it.

That forced the Obama administration to re-run the rulemaking process, and, to its credit, its second gainful employment rule, although still too weak to adequately protect students, was actually stronger than the first rule. For-profit colleges again sued to strike down the rule, but this time our coalition recruited Public Citizen, along with the NAACP Legal Defense Fund and the Leadership Conference on Civil and Human Rights, to file a strong amicus brief highlighting industry misconduct and the resulting injuries to students. That time, a trial judge, and a federal appeals court, upheld the Obama rule.

The for-profit colleges hire the most expensive, powerful law firms in America to attack in court regulations they dislike — and we taxpayers pay for that, since many of these schools get 80, 90, or more percent of their revenues from federal student aid.

But their efforts failed it stop the Obama rules, which would still be in effect if voters had not elected the president of Trump University the next President of the United States.

Now, with a strong public interest legal operation in place, to sue not only predatory schools but also the government on behalf of injured students, there is a better chance that DeVos’s unconscionable and illegal actions will not stand.