Project Vows to Challenge DeVos Over Devastating New Borrower Defense Rule that Will Gut Protections for Students | Press Release

August 30, 2019

“Betsy DeVos is throwing hundreds of thousands of students who have been defrauded by abusive for-profit colleges under the bus.”

 

BOSTON, MA – The Project on Predatory Student Lending vowed to challenge new borrower defense regulations filed today by U.S. Education Secretary Betsy DeVos that gut fair, basic, and needed protections for hundreds of thousands of student borrowers across the country, including many who were defrauded by for-profit colleges.

The new rule reverses basic borrower defense protections that were finally put into place when the 2016 borrower defense rule was implemented in October 2018, including the elimination of forced arbitration clauses in student contracts at for-profit colleges, providing for a group borrower defense process, and ensuring automatic loan discharges for students at schools that abruptly closed. The new rule imposes impossible burdens on defrauded borrowers, including a three-year statute of limitations, documentation of a litany of evidence, including proof of financial harm beyond that of the federal loan itself.

The Project announced that it now will be forced to sue to block this new rule from going into effect. It will be drafting the legal challenge in the coming days and further details will be provided at the time of the legal filing.

“Today Betsy DeVos is throwing hundreds of thousands of students who have been defrauded by abusive for-profit colleges under the bus,” said Project on Predatory Student Lending Legal Director Eileen Connor. “For the past two years, DeVos has refused to follow existing law and cancel the loans for these students, leaving them in debt they can’t get away from and their lives in limbo. Now, she’s shredding a set of fair, common-sense rules that level the playing field between students and those who take advantage of them. If Betsy DeVos won’t do her job and stand up for students, then we will fill that void. That is why we will be filing a suit challenging these harmful new regulations that give a green light to for-profit colleges to continue scamming students.”

For-profit colleges account for 13 percent of the student population, but 47 percent of federal loan defaults. And 98 percent of all loan cancellation applications sent to the federal government in 2018 were due to fraudulent for-profit colleges.

The Project on Predatory Student Lending, representing students who have been cheated by predatory for-profit colleges, has led the way to force the Department to implement the 2016 Borrower Defense Regulations. In the landmark case,  Bauer v. DeVos, the federal judge ruled that the delays were illegal and forced the Department to implement the regulations in October 2018. This case directly resulted in the Department of Education’s cancellation of $150 million in debt for 15,000 students whose for-profit schools had closed while they attended. On Tuesday, September 3rd, the Department will be obligated under the previous 2016 borrower defense rule to eliminate hundreds of millions of debt for ITT students upon the 3 year anniversary of ITT’s official closing.

Earlier this summer, the Project on Predatory Student Lending filed a lawsuit, Sweet v DeVos, against the U.S. Department of Education and DeVos seeking to force the agency to follow existing law and issue the debt relief to which the former students are entitled. In less than a month after the lawsuit was filed, hundreds of students voluntarily submitted their testimony to have their voices heard. Currently, 45 million Americans have nearly $1.6 trillion combined in student loan debt, depressing the economic progression of families and the broader economy. This lawsuit addresses the most pernicious type of student loan debt—the kind made to students at abusive for-profit colleges.

Click here for data about the students’ who submitted testimony. Click here to view testimonial excerpts and videos from students across the country who were defrauded by for-profit colleges.

 

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students.

The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.

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