A Federal Court on Tuesday cleared the way for Obama-era Student Loan Borrower Protections to take effect, handing a Defeat to Education Secretary Betsy DeVos after she fought for more than a year to Stop the Rules.
The Rules make it Easier for Defrauded Students to get their Federal Loans Forgiven and they also Prohibit Colleges from forcing Students to resolve Complaints through Arbitration, rather than going to Court.
U.S. District Judge Randolph Moss, an Obama Appointee, Rejected a Request by a For-Profit College group, California Association of Private Postsecondary Schools, had “failed to carry its burden of demonstrating that any one of its members is likely to suffer an irreparable injury” if the Rules were to take effect. The For-Profit College group’s Legal Challenge to the Rules will continue. The Trump Administration is Defending the Obama-era Rules in court as legal and constitutional even as DeVos has said that they are “bad policy” and continues the process to rewrite them. Consumer groups that have defended the Obama-era Rules celebrated the Ruling, saying it was an important step forward especially for those who Borrowed to attend For-Profit Schools.
DeVos and Conservatives have said the Obama-era Policies are Unfair to Colleges and too Costly for Taxpayers. She has Proposed creating a Stricter Standard for Fraud Claims and Eliminating the Ban on Mandatory arbitration Agreements. But DeVos’ push to Finalize those Revised Regulations has hit an unexpected snag that will Delay having a Replacement Policy on the Books by another year. The Education Department said it won’t meet a key Nov. 1st Regulatory Deadline, meaning that the Replacement Regulations aren’t likely to take effect until July 2020 at the earliest.
Those stumbles have angered For-Profit Colleges, who have been a reliable ally of the Trump Administration’s Agenda. Steve Gunderson, President and CEO of Career Education Colleges and Universities, blasted the Department’s Plan to Miss the Deadlines as "simply unacceptable” earlier this month, blaming the Administration for Not adequately Staffing the Agency. Gunderson on Tuesday said that he was Disappointed in the Ruling and suggested that the Trump Administration could still find a way to Not Enforce the Regulations. “There are many examples of both the Obama Administration, and the Bush Administration before that, choosing not to implement or enforce rules of the previous administration because they do not agree with such rules,” he said. “The Trump Administration should have the same authority to do so.”
The Court decision paves the path for the Rules to now take effect, since Moss has already struck down DeVos’ various Delays of the Regulations over the past year as Illegal. The Trump Administration said last week that it would not seek a further Delay.
The Decision is also a Victory for Democratic State Attorneys General, who with Consumer Advocates have been Fighting in Court to Force the Education Department to Enforce the “Borrower Defense” Rules, which were initially slated to take effect in July 2017. The Issue has been one of the most hard fought between Democrats and an Education Secretary whom they have Opposed on many fronts.
Maura Healey, the Democratic Attorney General of Massachusetts, who led a group of 18 States to challenge DeVos’ Postponement of the Rules said the Ruling was “a win for thousands of students across the country who were cheated by predatory for-profit schools.”
DeVos “respects the role of the court and accepts the court’s decision not to preliminarily enjoin the 2016 borrower defense regulation,” her Spokeswoman, Liz Hill, said in a Statement on Tuesday. The Department will “soon be providing further information regarding the next steps for implementation of the 2016 borrower defense regulation,” Hill said.
The Rules, which were created in the wake of the Collapse of For-Profit College Giants Corinthian Colleges and ITT Tech, outline how Defrauded Students can have their Federal Loans Discharged. They also Prohibit Colleges from requiring Students to Resolve Complaints through Arbitration rather than in Court. In addition, the Rules would give the Education Department more Power to take Action against Financially Risky Troubled Colleges.
Julie Murray, a Staff Attorney at Public Citizen, one of the Consumer groups that also Challenged DeVos’ Delays of the Rule, said that the Court Rulings were “an important step for borrowers and should be a signal for the department that its deregulatory agenda is both hurting borrowers and is not going to tolerated by the courts.”
The Court Ruling on Tuesday does Not Explicitly Order the Education Department to immediately Enforce the Rule. But Murray said that it’s clear that the Obama-era Rules became active at 12 p.m. when the Judge’s Decision striking down the Trump Administration’s Delays formally took effect.
“The department as of noon today has a legal obligation to implement this rule and, to the extent they don’t abide by that legal obligation, that is something that we and other consumer advocates will be watching closely,” she said.
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