Bauer v. DeVos and CAPPS v. DeVos


Who was involved in these cases?

The Project on Predatory Student Lending and Public Citizen represented Meaghan Bauer and Stephano Del Rose, former students of New England Institute of Art, a predatory for-profit college owned by Education Management Corporation (EDMC). Ms. Bauer and Mr. Del Rose moved to intervene in a lawsuit filed by the for-profit college industry group CAPPS against the Department of Education. Ms. Bauer and Mr. Del Rose subsequently filed a separate case against the Department of Education.


What were these cases about? What was the outcome?

The Education Department finalized a Borrower Defense Rule in 2016 prohibiting schools that receive federal funds from relying on forced arbitration agreements with their students. Forced arbitration agreements require students to submit any dispute that might later arise between the students and the institution to binding arbitration instead of a court of law. Binding arbitration is a private process with little right to appeal. Students typically cannot band together to bring joint claims in arbitration, and they often are forbidden from publicly discussing the arbitration process.

CAPPS sued the Education Department to try to block the 2016 rule. Shortly after the lawsuit was filed, the Department of Education announced it would delay key parts of the rule until the litigation is over and begin a new rulemaking session to reconsider the rule entirely. Ms. Bauer and Mr. Del Rose intervened to defend the rule, and brought a separate case to court to stop the illegal delay and enact the 2016 borrower defense rule.

In a victory for student borrowers, and another rebuke to Betsy DeVos, a court ruled in September 2018 that the Department of Education’s delays in implementing the 2016 Borrower Defense Rule were illegal. The ruling confirms that all three of the actions the Department took to thwart the 2016 borrower defense rule were illegal, and that the Department failed to weigh the harm that its delay imposed on student borrowers. The court also found that Department offered a plainly inadequate justification for changing its mind just months after it concluded in 2016 that the use of forced arbitration by schools was a risk to the integrity of the federal student loan program and unfair to borrowers.

In another order in January 2020, the court ruled against CAPPS, and found that the Department of Education has the authority to refuse federal financial aid to schools that enforce arbitration agreements or class-action bans. This is another victory for student borrowers, and upholds an important provision of the 2016 borrower defense rule.


Where and when was this case filed?

This case was filed in federal court in the District of Columbia. On June 15, 2017, Meaghan Bauer and Stephano Del Rose moved to intervene in the CAPPS lawsuit. On July 6, 2017, Bauer and Del Rose filed their own lawsuit against the Department of Education.

“This turned out to be a lie,” said Del Rose, who graduated from NEIA in 2014. “The equipment was outdated, the career services office wasn’t helpful, and I ended up working at Walgreens, just like I did before graduation.”

Why this Case?

For-profit colleges use forced arbitration agreements to strip students of their legal rights. Without access to the courts, students are not able to hold schools accountable for their illegal activity. By refusing to implement this rule, the Department of Education prevents students from taking the measures necessary to protect themselves against predatory institutions.

Case Updates

Student Advocates Announce Closed School Discharges for Over 30,000 Student Borrowers | Press Release

Student Defense and the Project on Predatory Student Lending issued statements today responding to the U.S. Department of Education’s confirmation that it had discharged loans for over 30,000 student borrowers under the automatic closed school discharge provision of the 2016 borrower defense rule. The discharges include roughly $95.1 million in relief for approximately 7,700 former students of the predatory for-profit college, ITT Tech.

Update | 2019: A Year of Student Victories And Holding Betsy DeVos Accountable

2019 was a landmark year for student borrowers cheated by for-profit colleges. The issue captured national attention as elected officials, advocates, students, media and the general public have tuned in to injustices taking place within the for-profit college industry, at the hand of the U.S. Department of Education. We continue to be inspired by students…

Project on Predatory Student Lending Statement on Education Department’s Processing of Automatic Closed School Discharges For Former ITT Students | Press Release

The Project on Predatory Student Lending today issued the following statement after the U.S. Department of Education confirmed it has finally begun to process automatic closed school loan discharges for a select group of former students of the predatory for-profit college, ITT Tech.



Memorandum Opinion

The Judge issued a Memorandum Opinion denying Plaintiff's motion for summary judgment and granting Defendant's cross-motion for summary judgment.



Memorandum Opinion and Order

The court granted the Plaintiffs' motion for summary judgment and ordered all parties appear for a status conference on September 14, 2018.


Memorandum and Opinion

The court denied CAPPS' motion for a preliminary injunction.


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