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Court Agrees That Trump’s Education Department Unlawfully Delayed a Rule That Protects Students From Predatory Schools

Sept. 13, 2018

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Court Agrees That Trump’s Education Department Unlawfully Delayed a Rule That Protects Students From Predatory Schools

Two Groups – Public Citizen and Project on Predatory Student Lending – Represented Students Seeking to Preserve Borrower Defense Rule

WASHINGTON, D.C. – The U.S. Department of Education broke the law when it delayed a rule designed to protect students defrauded by predatory for-profit colleges and career training programs, a federal district court judge ruled late Wednesday.

In July, attorneys for Public Citizen and the Project on Predatory Student Lending filed a lawsuit (PDF), Bauer v. DeVos, in the U.S. District Court for the District of Columbia seeking to preserve the “borrower defense rule.” The groups filed the suit on behalf of Meaghan Bauer and Stephano Del Rose, former students of the for-profit New England Institute of Art (NEIA) in Brookline, Mass., who believe that the school engaged in unfair and deceptive practices that left them with a useless education, few job prospects and significant debt.

The borrower defense rule was finalized in November 2016 and slated to go into effect on July 1, 2017. In May 2017, however, an industry group brought suit to challenge portions of the rule. In June 2017, the Trump administration announced it would delay key parts of the rule until that litigation was over. It announced further delays in October 2017 and February 2018.

In this lawsuit, Bauer and Del Rose argued that the delays violated the Administrative Procedure Act and the Higher Education Act.

On Wednesday, Judge Randolph D. Moss agreed that the delays were unlawful because the department failed to comply with the law’s procedural requirements and provided an insufficient rationale for its actions, thereby harming Bauer, Del Rose and students like them.

“Time and time again, we’ve seen the administration ignore the law in its attempt to undo the work of the previous administration,” said Adam Pulver, the lead Public Citizen attorney on the case. “We are pleased that the court recognized that the department’s desire to protect an industry that has defrauded thousands of students does not exempt it from complying with the law.”

Toby Merrill, director of the Project on Predatory Student Lending, said, “This is a major victory for student borrowers and for anyone who cares about having a government that operates under the rule of law, instead of as a pawn of the for-profit college industry. The 2016 borrower defense rule imposed critical protections for students, including banning forced arbitration policies that had stacked the deck in favor of predatory for-profit colleges. Today’s ruling clearly states that the department’s efforts to thwart those protections were illegal and had no basis in fact or the law.”

The court will hold a hearing on Friday, Sept. 14, to consider the proper remedy for the department’s unlawful actions.

Among other things, the 2016 borrower defense rule prohibits schools receiving federal funds from relying on forced arbitration clauses with their students. That feature of the rule also would ensure that Bauer and Del Rose could have their day in court in a suit against the NEIA. The rule also would provide Bauer and Del Rose, and many other student borrowers, with new protections and transparency when the Education Department considers their borrower defense applications.

Learn more about the case.