NYLAG v. DeVos

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 Was This Case Filed?

This case was filed in the U.S. District Court for the Southern District of New York.

 

When Was This Case Filed?

This case was filed on February 19, 2020.

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.

“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

Case Updates

Student Advocates Challenge DeVos’ Borrower Defense Rule | Press Release

Student advocates filed suit today to invalidate the U.S. Department of Education’s new 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 cancel loans.

Overturning the 2019 Borrower Defense Rule and What It Means for Borrowers | Blog

A rare bipartisan vote gives President Trump a chance to act in the interest of student borrowers.

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

On July 3, 2020, The Institute for Policy Integrity filed an Amicus Brief.

Motion for Summary Judgment

On June 29, 2020, Plaintiff's filed a Motion for Summary Judgment.

Complaint

On February 19, 2020, 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

The New York Legal Assistance Group Plans to File a Lawsuit Blocking DeVos’ “Borrower Defense” Rule | Politico’s Morning Education

The group, which provides free legal help to low-income individuals, expects to file the lawsuit this morning in federal court in the Southern District of New York. NYLAG is represented by Harvard Law School’s Project on Predatory Student Lending and Public Citizen Litigation Group, both of which successfully challenged DeVos’ efforts to delay the Obama-era “borrower defense” policy, forcing the 2016 rule to take effect.

Read More

Student Advocates Again Challenge DeVos in Court For Trashing Obama-Era Rules | Republic Report

Trump education secretary Betsy DeVos has trashed two key rules that the Department of Education, during the Obama administration, painstakingly developed to discourage for-profit colleges from deceiving and abusing their own students. With a new lawsuit filed today, advocates for students are now in court fighting to cancel both of the DeVos anti-rules and keep the previous Department regulations in place.

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Education Secretary Betsy DeVos Faces Another Lawsuit for Overturning an Obama-Era Rule | Yahoo Finance

A group of consumer advocates filed a lawsuit against the Department of Education (ED) for revising an Obama-era rule that was designed to protect students who were defrauded by predatory schools.

Read More