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Education Department’s Proposed Borrower Defense Rule Again Places Students at the Mercy of Predatory For-Profit Colleges

July 25, 2018

Education Department’s Proposed Borrower Defense Rule Again Places Students at the Mercy of Predatory For-Profit Colleges

Statements of Public Citizen Experts

Note: The U.S. Department of Education today proposed a new Borrower Defense Rule that would abandon important protections designed to stop for-profit colleges from forcing students to give up their right to take schools to court for wrongdoing by forcing them to arbitrate any claims. Forced arbitration provisions, together with bans on the right of students to band together in class actions and gag clauses that prevent students from discussing arbitration proceedings with other students, have stopped students from accessing the court system to bring claims of wrongdoing against for-profit schools, including the now-shuttered Corinthian Colleges and ITT Technical Institute. Public Citizen played a key role in fighting to ensure that the 2016 Borrower Defense Rule would prohibit schools that receive federal funds from using forced arbitration agreements and class-action waivers, and is challenging in litigation the department’s illegal delay of the rule’s effective date under Secretary Betsy DeVos.

“The Trump administration’s proposed rule is callous to the thousands of students harmed by an industry concerned only with its bottom line. Students must be able to hold predatory schools accountable in court for fraud and misrepresentation. Instead, the proposed rule announced today would help predatory schools evade liability while cutting off federal loan relief to students who can ill afford it. Make no mistake about it: This proposed rule tells predatory schools that crime pays.”

– Julie Murray, attorney, Public Citizen

“Sadly, this is the latest move by the Trump administration to protect powerful corporations over the powerless. Trump’s education department is abandoning a fair and strong rule that would protect students. Many nonprofit and public institutions already refuse to include these shameful provisions in their contracts, but we need protections against unethical for-profit colleges.”

– Lisa Gilbert, vice president for legislative affairs, Public Citizen

“The department had no reasonable grounds for rewriting the rule. Students should be able to depend on a fair and impartial legal process when they are wronged. Unfortunately, this move by the department underscores that the words ‘justice’ and ‘fairness’ seem to be foreign concepts to this administration.”

– Remington A. Gregg, counsel for civil justice and consumer rights, Public Citizen