18 states, consumer groups sue DeVos over delay of student loan protections

Eighteen states and the District of Columbia filed suit against Education Secretary Betsy DeVos on Thursday over her delay of regulations meant to protect federal student loan borrowers defrauded by their schools.

The lawsuit filed in Federal District Court in D.C., led by Massachusetts and joined by 18 other Democratic attorneys general, accuses DeVos of illegally delaying the regulations aimed at predatory colleges, which were finalized by the Obama administration and had been set to take effect on July 1.

The rules, known as “borrower defense to repayment,” sought to make it easier for defrauded student loan borrowers to seek debt forgiveness. They also prohibit colleges from requiring students to resolve complaints against their school through arbitration rather than in court.

The Trump administration last month delayed implementation of the rules, citing a legal challenge by a California association representing for-profit colleges. DeVos said at the time the rule created “a muddled process that's unfair to students and schools, and puts taxpayers on the hook for significant costs.” The Education Department has said it will begin a process to rewrite the rules later this year.

Separately, consumer groups on Thursday filed a second legal challenge to the Trump administration’s delay of the regulations.

The U.S. Education Department has not approved any applications for student-loan forgiveness in cases of possible fraud since President Donald Trump took office, according to records sent to an Illinois senator.

Democratic Sen. Richard Durbin released those records Wednesday and blasted the department for its inaction and for a June decision to delay and rewrite Obama-era rules that would have made it easier for students to get loans forgiven if they were deceived by their schools.

Borrowers who are awaiting a decision from the department have continued to accrue loan interest, which the department revealed amounts to $143 million.
“This response shows that while the Department of Education has illegally delayed the new borrower defense rule, it has also stopped processing federal student loan relief under current regulations for tens of thousands of defrauded borrowers,” Durbin said in a statement. “The department can’t ignore these borrowers any longer.”

Department officials did not immediately respond to a request for comment.