Hawaii Attorney General Chin Joins 18 States to Protect Students Cheated by for-Profit Colleges

Attorney General Doug Chin today joined a coalition of 18 states in suing the U.S. Department of Education and Secretary Betsy DeVos for abandoning critical federal protections that were set to go into effect on July 1, 2017.

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The complaint, filed by Massachusetts Attorney General Maura Healey in U.S. District Court in D.C. alleges that the Department of Education violated federal law by abruptly rescinding its Borrower Defense Rule. This rule was designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans. The rule was finalized by the Obama administration in November 2016 after nearly two years of negotiations, following the collapse of Corinthian Colleges, a national for-profit chain.

Attorney General Chin said, “More than 2,400 students in Hawaii were hurt by the actions of Heald College, the local brand name of Corinthian Colleges. Office of Consumer Protection Executive Director Steve Levins and I joined 18 states last month asking the federal government to act quickly to protect them. Secretary DeVos refused and is instead bending over backwards to help for-profit colleges.”

In May 2017, Secretary DeVos announced that the Department was reevaluating the Borrower Defense Rule. On June 14, the Department announced its intent to delay large portions of the Borrower Defense Rule without soliciting, receiving, or responding to any comments from any stakeholders or members of the public, and without engaging in a public deliberative process. The Department simultaneously announced its intent to issue a new regulation to replace the Borrower Defense Rule.

In a short notice published in the Federal Register, the Department cited pending litigation in the case California Association of Private Postsecondary Schools (CAPPS) v. Betsy DeVos as an excuse for delaying implementation of the Borrower Defense Rule. State attorneys general argue in their new lawsuit that “the Department’s reference to the pending litigation is a mere pretext for repealing the Rule and replacing it with a new rule that will remove or dilute student rights and protections.”

Additionally, without the protections of the current Borrower Defense Rule, many students who are harmed by the misconduct of for-profit schools are unable to seek a remedy in court. The Borrower Defense Rule limits the ability of schools to require students to sign mandatory arbitration agreements and class action waivers, which are commonly used by for-profit schools to avoid negative publicity and to thwart legal actions by students who have been harmed by schools’ abusive conduct.

Today’s complaint asks the Court to declare the Department’s delay notice unlawful and to order the Department to implement the Borrower Defense Rule.

The Department of Education’s negotiated rulemaking committee helped develop the Borrower Defense Rule, in large part as a result of state and federal investigations into for-profit schools such as Heald College. Under the rule, a successful enforcement action against a school by a state attorney general entitles borrowers to obtain loan forgiveness, and enables the Department of Education to seek repayment of any amounts forgiven from the school.

The coalition involved in today’s lawsuit, led by Massachusetts Attorney General Healey, include the attorneys general of Massachusetts, California, Connecticut, Hawaii, Iowa, Illinois, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington, Vermont, Virginia, and the District of Columbia.

A copy of the complaint is attached.

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