Betsy DeVos Loses Lawsuit, Cannot Delay Student Loan Protections Any Longer

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A federal judge has spoken, and student borrowers can rejoice. NPR reports that Education Secretary Betsy DeVos can no longer delay an important rule that protects student borrowers. The judge called attempts to delay it improper and unlawful.

The lawsuit was presided over by U.S. District Court Judge Randall Moss, and involved several parties. Essentially, two former students seeking relief from their student loan debt joined forces with consumer advocacy groups, and 20 Democratic attorneys general joined together to challenge the postponement of regulations that allow for “borrower defense to repayment.”

The regulations related to the borrower defense rule were introduced under former President Barack Obama, and the Trump administration has been postponing the regulations.

Betsy DeVos testifies before Congress on June 5.Featured image credit: Mark WilsonGetty Images

In layman’s terms, borrower’s defense helps those who attended a school and feel they were misled or that the school engaged in other misconduct. It allows the former students to seek defense from their loans. The rule was created in the mid-’90s, but very few made claims using it. However, in recent years, the closure of various for-profit schools, like Corinthian College and ITT Tech, has led to more interest in the once-obscure rule. During the Obama administration, the process for seeking student loan forgiveness was updated and clarified.

Since that update, more than 165,000 claims have been brought forth. Nearly every claim is related to attendance at a for-profit college, which is no surprise as those colleges are less regulated than public, government-funded universities. Meanwhile, DeVos has been attempting to make it harder for former students to file for debt relief.

Although the Obama administration updated the process, the claims levied are still being reviewed under the old rule from the ’90s. DeVos has been delaying the update since 2017, and has introduced the idea that students should only get some debt forgiven, and the amount should be dependent on their income.

Judge Moss said that the department’s actions were unlawful, and have deprived the students “of several concrete benefits that they would have otherwise accrued under the Borrower Defense Regulations.”

A hearing will take place Friday to determine the fate of the rule.

“This is such an important win for student borrowers and anyone who cares about a government that operates under the rule of law,” said Toby Merrill, of Harvard Law School’s Project On Predatory Student Lending.

Merrill also said there is a possibility that the judge could rule that the Obama-era regulations should be implemented immediately.