Democratic attorneys general sue Education Department over debt rules

Numerous attorneys general announced Thursday that they are suing Education Secretary Betsy DeVos and the department she leads over he decision to put a pause on new rules designed to protect students.

The attorneys general, all of whom are Democrats, represent 18 states plus the District of Columbia. They are suing over DeVos' decision to freeze rules that erase the loan debt of students who were defrauded by the colleges they attended.

Those "borrower defense" rules, which were finalized by the Obama administration last fall, have been challenged in a California court by a group of for-profit colleges. DeVos cited that lawsuit in her decision to suspend the rules, though she also called the regulations "unfair to students and schools."

"With this ideologically driven suit, the state attorneys general are saying to regulate first, and ask the legal questions later—which also seems to be the approach of the prior administration that adopted borrower-defense regulations through a heavily politicized process and failed to account for the interests of all stakeholders," Education Department spokesperson Liz Hill said in a statement. 

The rules came in response to fraud complaints against many for-profit colleges, some of which then collapsed. According to federal law, students can apply to have their debt relieved if their school broke consumer protection laws or defrauded them. The borrower defense rules would make those institutions pay for more of the debt relief, which in practice means some would have to close in order to put up collateral.

Until the new rules were issued, the bill for the debt relief was footed entirely by taxpayers.

"Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans," said Maura Healey, Massachusetts' attorney general, who is spearheading the lawsuit. "Her decision to cancel vital protections for students and taxpayers is a betrayal of her office's responsibility and a violation of federal law."

Two student borrowers also sued the Education Department on Thursday in a separate suit. They say they were mislead about their future earning potential by the New England Institute of Art, which stopped enrolling students two years ago and whose parent company had to pay the government $95 million in 2015 in order to settle a lawsuit involving recruitment.

The students hope to eventually sue the school, although without the borrower defense rules in place, their success in doing so would be unlikely.