NYLAG v. Cardona

Overview

Who Is Involved in This Case?

The Project on Predatory Student Lending and Public Citizen Litigation Group filed this case on behalf of New York Legal Assistance Group (NYLAG) against the Department of Education and Education Secretary Betsy DeVos. NYLAG is a non-profit organization in New York City that provides services including financial counseling and legal advice and representation to student borrowers.

 

What Is This Case About?

Student advocates at NYLAG are bringing this suit to invalidate the U.S. Department of Education’s 2019 borrower defense rules, which reverse vital protections from predatory schools and impose onerous standards and procedural hurdles for defrauded students seeking to assert their legal rights to loan cancellation. As a result of these changes, student borrowers will be harmed, and organizations like NYLAG, who are helping student borrowers, will have a harder time providing that help. The rules were published in September 2019 and are due to take effect in July 2020.

 

Where and When Was This Case Filed?

This case was filed in the U.S. District Court for the Southern District of New York on February 19, 2020.

“DeVos’s new rule allows predatory institutions to escape responsibility for their deceptive and misleading conduct, and forces students – and organizations like NYLAG – to bear the consequences.”

Adam Pulver, Public Citizen

Why this case?

Federal law allows students to seek cancellation of their federal student loans when the school they attended engaged in misconduct or closed suddenly. In 2016, the Department of Education issued new rules to stop schools from forcing students out of court, and to specify new procedures for borrower defense. Secretary DeVos attempted to block those rules from going into effect three times – and lawyers from Public Citizen Litigation Group and the Project on Predatory Student Lending were successful in having those attempts declared illegal.

 

Undeterred, the Department of Education issued a new rule, which resulted from a fatally flawed process and is grounded on the false premise that student borrowers are the bad actors. Ignoring the Department’s responsibility to students and taxpayers, the rule protects predatory schools from liability for their bad behavior. The rule is contrary to the purpose of borrower defense, which is to allow cheated borrowers to cancel fraudulent debt. Among other harmful changes, the new rule:

  • Eliminates conditions on the use of forced arbitration and class-action bans;
  • Increases the hoops students must jump through to obtain relief when their schools close;
  • Removes key disclosure requirements that inform students about their schools’ status;
  • Imposes a narrow three-year statute of limitations for borrowers to raise claims;
  • Eliminates the ability for borrowers to seek to have their claims decided as part of a group of similarly situated students; and
  • Heightens the evidentiary standard to which borrowers’ claims would be held, including requiring students to offer proof of financial harm beyond that of the federal loan itself.

Case Updates

Project on Predatory Student Lending Statement on Order in NYLAG v. DeVos | Blog

On Wednesday (March 17th) a judge ruled on the challenge to the DeVos borrower defense rule in the case NYLAG v. DeVos. We argued that many different parts of the rule are unlawful and illogical. The judge agreed that the three-year statute of limitations on defensive claims was illegal, and sent that part back to…

Six Months into 2020: Wins for Students and Fighting for Justice | Blog

Six months into 2020 and the Project on Predatory Student Lending has won a major lawsuit against the Department of Education in Vara v DeVos, and agreed to a proposed settlement in Sweet v DeVos. They’ve also continued to fight for justice in across other new pieces litigation this year.

Congress Fails To Override Trump’s Veto on Secretary DeVos’ Devastating New Borrower Defense Rule | Press Release

U.S. House of Representatives failed to override President Trump’s veto of bipartisan legislation that would overturn the devasting DeVos borrower defense rule. The rule eliminates vital protections for student borrowers and imposes nearly impossible standards for students defrauded by predatory schools to assert their rights to loan cancellation.

Case Documents

Institute for Policy Integrity, Amicus Brief

The Institute for Policy Integrity filed an Amicus Brief.

Motion for Summary Judgment

Plaintiff's filed a Motion for Summary Judgment.

Complaint

The Project on Predatory Student Lending and Public Citizen Litigation Group filed a complaint on behalf of New York Legal Assistance Group (NYLAG) against the Department of Education, challenging the Department's 2019 borrower defense rule.

Coverage

Borrower-Defense Rule Saved by Trump Veto but Still Faces Fight in Court | Inside Higher Ed

U.S. Education Secretary Betsy DeVos’s controversial borrower-defense rule cleared one hurdle with President Trump’s veto Friday evening of a congressional resolution that would have undone it. But the rule, which would make it harder for borrowers to have their student debt forgiven if they were defrauded by their colleges, still faces a legal challenge before it is due to go into effect July 1.

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Lawsuit Challenges Trump Administration Toughening of Student Loan Cancellation Rules | NY Daily News

Kacey Martinez was stunned when her Manhattan college abruptly shut its doors in 2017, leaving her with no degree and thousands of dollars in debt. “I didn’t know that things like that happened,” fumed the 24-year-old Bronx resident of the sudden demise of TCI College of Technology in Chelsea.

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Senate Might Rebuke DeVos on Borrower Defense | Inside Higher Ed

For all of President Trump’s controversial policies, it has been rare for the Republican Senate to formally condemn the administration. But lobbyists on both sides of the debate over U.S. Education Secretary Betsy DeVos’s borrower-defense rule say it’s increasingly possible that the Republican Senate could join the Democratic House in rebuking the administration over the rule critics say makes it harder for defrauded students to have their education loans forgiven.

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