SACRAMENTO, July 6, 2017 – California Attorney General Xavier Becerra today filed a lawsuit against the U.S. Department of Education for unlawfully delaying the implementation of regulations aimed at protecting students from deceptive practices and fraud. The regulations, known as the “Borrower Defense Regulations,” were set to take effect on July 1, but Education Secretary Betsy DeVos announced last month that the Department of Education would refuse to implement them as part of a “regulatory reset” while looking to develop alternative regulations that would likely leave victimized borrowers with far less protection. This refusal is a violation of the Administrative Procedure Act because the Department improperly relied upon a legal challenge to the regulations as a basis for delay and also failed to provide the public with the required notice and opportunity to comment on the delay.
The California Attorney General’s Office played a key role in drafting the Borrower Defense Regulations, which require the Department to provide a streamlined loan forgiveness process to those students who have been defrauded by for-profit universities.
“The Trump Administration should do everything in its power to protect our students,”said Attorney General Becerra. “At the California Department of Justice, we will continue working to ensure that all who seek higher education can do so without worrying that their American Dream will be stolen by unscrupulous purveyors of a sham college education. These regulations should be implemented because they’re good for students and because that’s what the law requires.”
The California Attorney General’s Office led the charge against California-based Corinthian Colleges for targeting low-income, vulnerable individuals through false advertisements that misrepresented job placement rates and the value of school programs. The Attorney General’s Office obtained a $1.1 billion judgement against Corinthian on March 26, 2016, and worked with the Obama Administration to ensure that tens of thousands of former Corinthian students are entitled to federal student loan relief. Subsequently, the Attorney General’s Office worked with the Department of Education as the primary negotiator representing the interests of state attorneys general to enact new regulations and improve the loan forgiveness process for students defrauded by their schools. This process ultimately led to the development of the Borrower Defense Regulations at issue, which incorporate many of the provisions advocated by the Attorney General’s Office, including:
- Automatically canceling eligible loans for students who were defrauded;
- Taking greater steps to ensure a school’s financial viability; and
- Banning schools from including or enforcing certain arbitration provisions or class-action waivers in their enrollment agreements.
Joining Attorney General Becerra in filing the lawsuit are the attorneys general of 17 other states and the District of Columbia. Attorney General Becerra and eight other attorneys general previously filed a motion to intervene in a lawsuit challenging the Borrower Defense Regulations so that they could ensure that the regulations are adequately defended.