Students Win Legal Action against US Education Department

Students defrauded 1 by for-profit colleges won an important legal victory on Tuesday.

A U.S. federal court ruled against a request to delay a policy from former President Barack Obama’s administration. The policy makes it easier for those students to get their student loans forgiven.

The policy is known as borrower defense 2, and was originally meant to go into effect in July 2017. But current Education Secretary Betsy DeVos said the rule made forgiving loans too easy and was unfair to taxpayers 4. So, she blocked it while attempting to create a new policy in its place.

Last month, U.S. District Judge Randolph Moss 5 decided 6 that DeVos’ delay was unlawful. This week, he denied a request from an organization representing for-profit colleges to delay the rule even longer.

Julie Murray is an attorney with Public Citizen. She represents the students in the legal action against the Education Secretary.

“The rule is finally in effect,” Murray told the Associated Press. “No more excuses. No more delays.”

In a statement on Tuesday, Education Department spokeswoman Liz Hill said DeVos “respects the role of the court and accepts the court’s decision.” She added that the department will soon provide information about how the rule will take effect.

But DeVos continues to consider the rule to be “bad policy” and will continue writing a new rule “that protects both borrowers and taxpayers,” said Hill.

The court’s decision means the Obama rule on loan forgiveness could be in effect until July 2020. At that point, the new rule written by DeVos will come into effect.

Under the Obama rule, students whose school closed mid-program or shortly after completion, will become eligible 7 for immediate 8 loan relief. This will likely help former students of Corinthian Colleges, for example, a company which closed its entire school system overnight in 2015. The U.S. government had found evidence it was defrauding 9 its students. And the following year, several court cases ruled that Corinthian owed millions of dollars to both its debtors 10 and former students.

The Department of Education first created the rule governing borrower defense in 1994. Use of the rule was uncommon 11, until the Obama administration made changes to it in 2016, following the closing of Corinthian and other for-profit colleges. The application process for student loan relief became clearer and more developed.

The Century Foundation is a policy research organization. Experts with the progressive organization estimate that the court’s decision will affect tens of thousands of students at over 1,400 schools. The students will now be eligible for $400 million in immediate debt relief across the nation.

Other parts of the rule permit students to apply for loan relief as a group. It also prevents schools from forcing students to sign away their rights to take legal action against their program. And it makes sure that the schools have some financial responsibility to help relieve student loan debt if they close. That way it is not entirely 12 taxpayer 3 money covering those costs.

Over 100,000 students say their schools have defrauded them. They are currently waiting for the Education Department to consider their applications for loan forgiveness. James Kvaal is the president of the Institute for College Access and Success. He said the department must immediately stop student debt collections and completely relieve loans of those borrowers whose schools have been shut down.

Toby Merrill is the director of the Project on Predatory Student Lending at Harvard University. His organization also took part in the legal action against the Education Department. He said, “This is a major victory for students across this country in the ongoing 13 battle against the Department of Education and the for-profit college industry.”

But Steve Gunderson described Judge Moss’s decision as “disappointing.” Gunderson is the president of Career Education Colleges and Universities, a group that supports the for-profit college industry.

“It will only create further confusion for students and schools,” he said. He also urged the Education Department to provide as much as assistance as possible while it finishes writing the new rule.

The California Association of Private Postsecondary Schools is the organization that requested further delays to loan relief policy, in addition to DeVos’s delays. The group did not return a request for comment from the Associated Press.

I’m Pete Musto. And I’m Dorothy Gundy.

Words in This Story

defraud(ed) – v. to trick or cheat someone or something in order to get money

originally – adv. when something first happened or began

attorney – n. a person whose job is to guide and assist people in matters relating to the law

eligible – adj. able to do or receive something

application – n. a formal and usually written request for something, such as a job, admission to a school, or a loan

progressive – adj. using or interested in new or modern ideas especially in politics and education

forcing – v. making someone do something that he or she does not want to do

sign away – p.v. to give something, such as rights or property, to someone by signing a document

disappointing – adj. not as good as expected by not being what was hoped for or expected

confusion – n. a situation in which people are uncertain about what to do or are unable to understand something clearly