June 15, 2017
Public Citizen and Project on Predatory Student Lending Intervene in Suit To Protect Students Victimized by Predatory Schools
Education Department’s Delay of Important Rule Permits Continued Use of Forced Arbitration by Schools
WASHINGTON, D.C. – The Trump administration cannot be trusted to protect students defrauded by predatory for-profit colleges and career training programs that receive federal funding, Public Citizen and the Project on Predatory Student Lending said in a motion to intervene filed today in a suit pending in the U.S. District Court for the District of Columbia.
The two groups filed the motion on behalf of Meaghan Bauer and Stephano Del Rose, former students of the for-profit New England Institute of Art (NEIA) in Brookline, Massachusetts. The students allege that NEIA engaged in unfair and deceptive practices against them and other students that left them with a useless education, few job prospects and a mountain of debt. Thousands of students around the country have faced similar circumstances after dishonest recruiters lured them to enroll in predatory schools.
Bauer and Del Rose are counting on an Education Department rule finalized by the Obama administration that prohibits schools receiving federal funds from relying on forced arbitration agreements with their students. This “Borrower Defense” rule will ensure that Bauer and Del Rose have their day in court, but an industry group has filed suit against the Education Department to block the rule. Yesterday the Trump administration announced it would delay key parts of the rule until the litigation is over and begin a new rulemaking to reconsider the rule.
“The Borrower Defense rule is on solid legal ground and has already been the subject of months of negotiation and thousands of public comments,” said Julie Murray, attorney, with Public Citizen’s Litigation Group. “We don’t need more consideration of this rule. We need an Education Department with the spine to stick up for borrowers and the will to abide by its obligation to enforce the law. Since we clearly don’t have that, our clients have moved to intervene in the litigation to defend their interests.”
“Secretary Betsy DeVos’s decision to delay key pieces of the Borrower Defense rule is a disgrace,” said Toby Merrill, director, Project on Predatory Student Lending of the Legal Services Center of Harvard Law School. “The Department is using this litigation as cover for avoiding enforcement of the rule, to the detriment of borrowers like Ms. Bauer and Mr. Del Rose. The delay announced by the Department serves to line the pockets of for-profit executives at the expense of vulnerable students and federal taxpayers. It doesn’t serve borrowers.”
Forced arbitration clauses require students to submit any dispute that might later arise between the students and the institution to binding arbitration, a private process with little right to appeal, instead of a court of law. Students typically cannot band together to bring their claims jointly in arbitration, and they often are forbidden from publicly discussing the arbitration process.
Read the motion here.