Bauer v. DeVos and CAPPS v. DeVos

Overview

On June 15, 2017, Meaghan Bauer and Stephano Del Rose, former students of EDMC-owned New England Institute of Art, moved to intervene in a lawsuit brought by the for-profit college industry because the Trump administration could not be trusted to protect students defrauded by predatory for-profit colleges and career training programs that receive federal funding.

On July 6, 2017, Ms. Bauer and Mr. Del Rose filed their own lawsuit against the Secretary of Education for illegally delaying rules intended to protect borrowers’ rights. They are represented by the Project on Predatory Student Lending and Public Citizen in both lawsuits.

On October 16, 2018, a judge refused to block the delayed rules from taking effect. As a result, the rules took effect on October 16, 2018 after more than a year of illegal delays.

Background

Ms. Bauer and Mr. Del Rose are counting on an Education Department rule finalized in 2016 that prohibits schools receiving federal funds from relying on forced arbitration agreements with their students. Forced arbitration clauses require students to submit any dispute that might later arise between the students and the institution to binding arbitration, a private process with little right to appeal, instead of a court of law. Students typically cannot band together to bring their claims jointly in arbitration, and they often are forbidden from publicly discussing the arbitration process.

This Borrower Defense rule will ensure that Ms. Bauer and Mr. Del Rose have their day in court. A for-profit school industry group, CAPPS, sued the Education Department to try to block the rule. Shortly after the lawsuit was filed, the Trump administration announced it would delay key parts of the rule until the litigation is over and begin a new rulemaking to reconsider the rule.

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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“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

CASE DOCUMENTS

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.

10/02/2018

States Amicus Brief

On October 02, 2018, Massachusetts, Pennsylvania, California, Iowa, New York, Oregon, Washington, Illinois, Maryland, and the District of Columbia filed a brief of Amici opposing the renewed motion for preliminary injunction.

10/16/2018

Memorandum and Opinion

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

Coverage

Defeated In Court, Education Dept. To Cancel $150 Million Of Student Loan Debt | NPR

The U.S. Department of Education is sending emails to about 15,000 people across the country telling them: You’ve got money. These are former students — and some parents of students — who took out loans for colleges that shut down between Nov. 1, 2013, and Dec. 4, 2018. About half attended campuses run by Corinthian Colleges. They will get their money back or have their debt forgiven — an amount estimated at $150 million, all told — under a provision called Automatic Closed School Discharge.

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Dept. of Education to Cancel $150 Million in Student Loan Debt | NBC News

The U.S. Department of Education announced Thursday it would automatically cancel $150 million in student loans connected to for-profit colleges that closed in recent years. The move was made under an Obama-era policy that a federal judge in October essentially forced U.S. Secretary of Education Betsy DeVos to implement. The story was first reported by Politico.

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Education Dept. Will Cancel $150 Million in Student Debt After Judge’s Order | New York Times

The Education Department is wiping $150 million in federal student loans off the books, and has begun the process of informing thousands of borrowers that they no longer owe the government money because the schools they attended shut their doors. The loan forgiveness, announced this week, applies to about 15,000 borrowers as federal education officials begin to carry out new rules that they fought in court for more than a year before giving up in October.

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