Education Secretary Betsy DeVos effectively took away students’ rights when she delayed an Obama-era rule designed to protect them from predatory for-profit colleges, Public Citizen says in a lawsuit filed on behalf of two students who say their school lied to them about the quality of education it offered.
Among other things, the Department of Education’s Borrower Defense Rule requires schools that participate in the federal student loan program to agree that they will not rely on fine-print arbitration clauses that prevent students from suing those schools in court. The rule provides a critical protection for students and taxpayers alike, as for-profit colleges continue to engage in deceptive practices – often against vulnerable and low-income students – while raking in government subsidies.
Public Citizen and Harvard Law School’s Project on Predatory Student Lending filed the lawsuit in the U.S. District Court for the District of Columbia in July. The lawsuit was filed after DeVos delayed the Borrower Defense rule just one month before it was set to go into effect – for arbitrary reasons that capitulated to the for-profit college industry.
DeVos “effectively revoked students’ rights under the rule while giving a pass to predatory schools that wield influence with this administration,” said Julie Murray, a Public Citizen attorney representing the plaintiffs, two former students of the for-profit New England Institute of Art (NEIA) in Brookline, Mass.
In addition to the suit brought by Public Citizen and the Project on Predatory Student Lending, 18 state attorneys general also filed a lawsuit in July charging that the Education Department’s delay of the rule was unlawful. As Massachusetts Attorney General Maura Healey said in a statement, “Since Day One, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans. Her decision to cancel vital protections for students and taxpayers is a betrayal of her office’s responsibility and a violation of federal law.”
Public Citizen represents plaintiffs Meaghan Bauer and Stephano Del Rose, who allege that NEIA – which is owned by the Education Management Corporation (EDMC) – used unfair and deceptive practices against them and other students, cheating them out of a useful education and job prospects and saddling them with heavy debt.
Del Rose attended the institute from 2009 to 2014, and Bauer attended from 2011 to 2014. Each incurred more than $40,000 in debt while studying filmmaking and video production.
“I went to NEIA because I dreamed of making movies that would create social change,” Bauer said. “I wanted to shine a spotlight on issues facing teens living in poverty, like lack of mental health supports and economic opportunities, and exposure to gang violence. NEIA’s recruiters told me that going to NEIA would open up lots of job opportunities for me and move my resume to the ‘top of the pile,’ but I soon realized I’d been misled. I now work as a line cook at the same restaurant where I worked before going to NEIA. I’ve had to start over at a new school to pursue my goals, but it’s harder now because of my student loan debt from NEIA and my inability to obtain federal financial aid for a real education.”
Bauer and Del Rose asked the Education Department to cancel their loans based on the NEIA’s fraud and other abuses. They have been waiting for an answer since September 2015 and August 2015, respectively.
Some predatory schools rely on federal student aid programs to keep running, even though they may have more dropouts than graduates. Moreover, the schools frequently target low-income and vulnerable students. The poor quality of the schools and the unmanageable debt makes it even harder for students to obtain meaningful training and education after leaving such schools, the lawsuit said. Without those, job prospects become even dimmer.
The Borrower Defense rule was set to go into effect on July 1. Under DeVos, the Education Department delayed its implementation in June, after the California Association of Private Postsecondary Schools (CAPPS), a trade group representing the state’s private and for-profit colleges, sued to change certain provisions. In addition, the Trump administration announced that it would begin a new rulemaking to reconsider the rule. Under the terms of the statute that governs the rulemaking, a replacement would not take effect for at least two years.
The Education Department’s justifications for delaying implementation of the rule ignore the substantial benefits that the rule would confer on student borrowers, the federal government, and the general public. DeVos’ decision was “arbitrary, capricious, contrary to law and in excess of the agency’s statutory authority,” Public Citizen’s lawsuit states.
“Delaying the Borrower Defense rule will leave hundreds of thousands of borrowers like Bauer and Del Rose with a right to have their federal loans cancelled but little clarity about how the Education Department must carry out that process,” said Toby Merrill, director of the Project on Predatory Student Lending. “Not only does the department want to pull back the process it has committed to, but it also is capitulating to companies that want to keep borrowers from enforcing their rights in court.”
The for-profit education industry has left millions of students with unmanageable financial debts that they incurred to pursue a credential with little to no value. The Borrower Defense Rule was created to prevent that problem from continuing.