Trump’s Department of Education Signals Its Intention to Protect Predatory, For-Profit Colleges Over Students

Nov. 13, 2017

Trump’s Department of Education Signals Its Intention to Protect Predatory, For-Profit Colleges Over Students

As Officials Meet to Unravel Protections, Public Citizen Urges Administration to Keep Borrower Defense Rule

WASHINGTON, D.C. – The U.S. Department of Education should preserve a rule that would allow students who are the victims of fraud or deception to sue predatory, for-profit colleges, Public Citizen will tell administration officials as they meet about the rule this week.

The department this week will begin negotiations to revise the rule. The department has signaled its intention to remove critical protections for students.

Last year, the Obama administration finalized a rule, known as the Borrower Defense rule, that would have, among other things, expanded students’ access to loan cancellation when the schools they attended defrauded them. The rule also would have prevented schools that want the benefits of participation in federal student loan programs from putting forced arbitration provisions and class-action bans into their contracts with students. Through forced arbitration clauses, schools require students to use secretive proceedings rather than neutral courts to settle any disputes that may arise. Class-action bans prevent students from banding together to challenge fraud and abuse.

At the first of three negotiating sessions due to take place over the next few months, Public Citizen will seek to address the negotiators and explain that the department has no reasonable grounds for rewriting the rule, which affects only schools that receive federal funding and applies only to situations where students seek to raise defenses like fraud against continued loan liability. The rule does not stop schools from requiring students to agree to arbitration to resolve other grievances.

“Most nonprofit and public institutions already refuse to include these shameful provisions in their contracts,” said Remington A. Gregg, counsel for civil justice and consumer rights at Public Citizen. “But unethical for-profit colleges often do, and the need for legal remedy is often very high at these institutions. Some of these schools have no business calling themselves institutions of higher learning.”

Forced arbitration provisions, together with “go-it alone” class-action bans and gag clauses, which prevent students from discussing arbitration proceedings with other students, have stopped students from having their day in court when schools like Corinthian College and ITT Technical Institutes committed abuse and fraud against their students.

This spring, a trade association brought a lawsuit challenging the rule, and the Trump administration seized on the lawsuit as a pretext for delaying the key provisions of the rule. Public Citizen attorneys are challenging that delay in court.

Public Citizen played a key role in advocating that the current rule include protections against forced arbitration and will fight the administration’s attempt to reverse these protections.

“It isn’t surprising that the person who founded Trump University – a ‘university’ only in name – would appoint an education secretary determined to shield scamming schools from accountability when they defraud students,” said Lisa Gilbert, vice president for legislative affairs at Public Citizen. “The final rule must remain protective of these vulnerable students seeking quality education.”

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