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A federal judge will rule Friday on how to deal with an inappropriate decision by Education Secretary Betsy DeVos to freeze a plan to help student borrowers who have been deceived by their schools.
A new rule from the education department would have accelerated and expanded a system aimed at clearing federal student loan debts of school students who have violated state laws and misled their participants. Judge Randolph D. Moss, a federal judge in Washington, said Wednesday that the department's decision to postpone the rule a few weeks before its start date last year was "arbitrary and capricious."
The decision was a victory for the attorneys general of 18 states and the District of Columbia, who filed a lawsuit last year challenging the decision of the Department of Education.
"It is time for this rule to come into effect and give thousands of students the help they expected," said Maura Healey, Attorney General of Massachusetts, who led the multi-state coalition that opposed the delay. .
The education department is reviewing the decision, said Liz Hill, a spokeswoman. She declined other comments.
Justice Moss's decision may lead to changes in the way the government handles tens of thousands of existing claims from students seeking release. But the remedies it could order may soon be dull: the Education Department is working on a complete overhaul of its system for handling future claims.
Despite this, the decision was the latest in a series of judicial retaliations to the Trump administration for attempting to shorten the government's formal adoption and elimination of agency rules. The judges dismissed attempts by several agencies to eliminate or suspend indefinitely the rules they did not like, including new restrictions on methane emissions from oil and gas wells and one lane of immigration for startup technology entrepreneurs.
The loan cancellation system, called Borrower Defense, was created in 1995 but was only used a few years ago, when a series of failures in for-profit chains like Corinthian Colleges and ITT generated Debts contracted for credentials that have done little to improve their employment prospects.
By the end of last year, the Department of Education had close to 100,000 requests for assistance pending, and many of them had languished for years without a decision. Ms. DeVos suspended a rule change set in motion by the Obama administration that would have given faster relief to large batches of defrauded borrowers. It would also have required schools in difficulty to generate claims for financial security.
At a conference last year, Ms. DeVos criticized this approach.
"While students should have protections against predatory practices, schools and taxpayers should also be treated fairly" she says. "Under the previous rules, it was enough to raise the hand to be entitled to the so-called free money."
After suspending the rule of the Obama era, the department has come up with a new relief formula under the existing system which, for many plaintiffs, only forgave for part of their debt. In May, a judge invalidated this approach, finding that the department improperly obtained the earnings data it used to calculate its relief.
A spokeswoman for Healey said the attorneys general would ask Judge Moss to order that the Obama era rule be enforced immediately.
If that happens, tens of thousands of borrowers could finally see their claims resolved, said Toby Merrill, director of the Predatory Student Loans Project at Harvard University, which represents several borrowers who
But the relief could be short-lived. In July, DeVos proposed a new rule that would completely revise the borrowers' defense system and grant a loan exemption only to those who could prove that they had experienced severe financial difficulties, among other new requirements.
This new rule should come into effect in July.
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