Bauer v. DeVos and CAPPS v. DeVos

Overview

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 was this case filed?

This case was filed in federal court in the District of Columbia.

 

When was case filed?

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.”

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“While students should have protections from predatory practices, schools and taxpayers should also be treated fairly as well. Under the previous rules, all one had to do was raise his or her hands to be entitled to so-called free money.”

DeVos

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

Update | LSC’s Project on Predatory Student Lending and Public Citizen Sue to Stop Education Department’s Illegal Regulatory Delay

The U.S. Department of Education broke the law when it announced a delay of a rule designed to protect students defrauded by predatory for-profit colleges and career training programs, two borrowers said in a lawsuit filed today in the U.S. District Court for the District of Columbia.

Update | Judge Rules for Project’s Clients; Strikes Down Department of Education Illegal Delay of 2016 Borrower Defense Rule

In another major rebuke to DeVos, the Project wins Bauer v. DeVos case Judge rules that the Department of Education’s delays in implementing 2016 borrower defense rule were illegal and caused serious harm to borrowers   In a victory for student borrowers, and another massive rebuke to Betsy DeVos, a court this week ruled that…

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CASE DOCUMENTS

01/31/2020

Memorandum Opinion

On January 1, 2020, the Judge issued a Memorandum Opinion denying Plaintiff's motion for summary judgment and granting Defendant's cross-motion for summary judgment.

 

09/12/2018

Memorandum Opinion and Order

On September 12, 2018, the court granted the Plaintiffs' motion for summary judgment and ordered all parties appear for a status conference on September 14, 2018.

10/16/2018

Memorandum and Opinion

On October 16, 2018, the court denied CAPPS' motion for a preliminary injunction.

Coverage

Cancel Student Debt, Boost the Economy | Medium

In April, Senator Elizabeth Warren released a bold plan for free public college and debt cancellation. This transformational proposal takes direct aim at some of the deepest inequities in education in America, and it’s funded by her Ultra-Millionaire tax on wealth above 50 million. The plan includes a $50 billion minimum fund for historically Black colleges and universities (HBCUs) and minority-serving institutions, and will make public college tuition-free at both two- and four-year institutions.

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Despite Court Rulings, DeVos Leaves Obama-Era Rules Unenforced | Wall Street Journal

Education Secretary Betsy DeVos’s two-year effort to chisel away at the Obama administration’s education agenda has repeatedly been blocked by federal courts. Now, she is trying a different tactic: not enforcing the rules.

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Education Department Has Stalled on Debt Relief for Defrauded Students | New York Times

The Education Department failed to approve a single application for federal student loan relief in the second half of last year, according to new department data that signals that students who claim they were cheated by their colleges cannot count on help from Washington anytime soon.

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