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Betsy DeVos's Department of Education's efforts to thwart an Obama-era rule of for-profit colleges is a major hurdle.
A district court judge ruled Wednesday night that the Department's multiple attempts to delay settlement, known as the borrower's defense rule, have no legal basis. The decision was made in the context of a lawsuit filed on behalf of borrowers by Public Citizen, a consumer advocacy organization and Harvard Law School's Project on Predatory Student Lending.
The decision also addresses similar proceedings initiated by 19 states to slow down the implementation of the rule.
"This is not the first time, but it is a very important time when we have obtained illegal attempts by the Department to deprive people of their rights," said Toby Merrill, director of students.
This decision is the latest in a number of years about the borrowers defense rule, which allows borrowers to have their federal debt repaid in cases where they have been misled by their schools. The Obama administration has developed the rule, amid pressure from activists as a result of the collapse in 2015 of Corinthian Colleges, a major for-profit academic chain.
The regulations have been in place since the 90s, but borrowers rarely used it until activists organized students who attended Corinthian and other for-profit colleges accused of stealing money. mislead students to file complaints under the law. With thousands of people claiming relief, the Obama era department began developing a process for borrowers to file claims and the agency to assess them.
This rule, which was to come into force in July 2017, also included a provision prohibiting institutions from requiring students to waive their right to go to court or to bring a class action against a school to register. But the Devos Department of Education has taken several steps to delay the application of the rule.
In his ruling, the judge described these attempts as "arbitrary and capricious" and "illegal construction of the law on higher education", the law governing higher education and student aid policy.
"All these attempts to thwart this rule have failed," said Merrill.
Liz Hill, a spokeswoman for the department, said the agency was reviewing the decision. In the past, DeVos defended the delays, declaring in a statement that Obama's regulatory efforts "missed an opportunity to do things right" and resulted in a confusing process for students and schools . filed by a for-profit college business group challenging the time defenses rule.
In July, the Department proposed its own version of the rule, which limited much of the provisions of the Obama era. The new version is expected to come into force no earlier than July 2019, but may face legal challenges.
In the meantime, the judge's decision could provide an opportunity for the borrower's defense rule developed during the Obama administration. The parties will meet on Friday to determine the way forward. Merrill said she hoped the judge would decide to bring the original version of the regulations into effect immediately. The decision could also cast doubt on any new borrower's defense rule issued by the ministry, Merrill said.
"We'll have to reduce the total number of cards," said Eileen Connor, Litigation Director of the Predatory Student Loans Project.
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