Earlier this month, California Attorney General Xavier Becerra and Massachusetts Attorney General Maura Healey led a group of twenty-three attorneys general in a lawsuit against the U.S. Department of Education (the “Department”) and Secretary of Education Betsy DeVos (the “Secretary”). According to a news release from the California Attorney General’s Office, the lawsuit, filed in the Northern District of California, alleges the Department unlawfully repealed and replaced the 2016 “borrower defense” regulations promulgated by the Obama administration. The lawsuit alleges the Department’s decision violates the Administrative Procedure Act (“APA”) and asks the court to reimplement the 2016 regulations.
In November 2016, the Department issued the borrower defense regulations to provide misled and defrauded borrowers an efficient process to seek debt relief following the collapse of a predatory, for-profit university system that left tens of thousands of students in need of relief. These regulations also provided taxpayer protection by holding schools accountable for misconduct and ensuring financially troubled schools provided financial protection to the government. According to the news release, the Department has replaced the borrower defense regulations with a process “seemingly designed to thwart relief for defrauded students and shield predatory schools from being held accountable.”
In the lawsuit, the attorneys general argue the Department’s decision to repeal the borrower defense regulations violates the APA for the following reasons:
- It is arbitrary and capricious: The Department’s decision was not the product of reasoned decision making as required by the APA. Specifically, the lawsuit alleges the Department rejected prior agency determinations going back decades without explanation, grounded its analysis in fundamental misunderstandings, failed to consider alternatives, and disregarded facts and circumstances; and
- It does not comply with Congress’s requirement that the Secretary implement a meaningful process for borrowers to obtain relief: The lawsuit alleges the Department’s new regulations establish an illusory process that makes it almost impossible to obtain debt relief. Further, the Department has admitted as much by acknowledging that only around four percent of borrowers eligible for relief will actually obtain it.
California and Massachusetts are joined by the attorneys general of Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Wisconsin, and the District of Columbia.