Raúl Torrez | Attorney General

Attorney General Balderas Files Suit Against Secretary DeVos and U.S. Department of Education for Unlawfully Repealing Critical “Borrower Defense” Regulations

For Immediate Release:
July 15, 2020
Contact: Matt Baca — (505) 270-7148

Santa Fe, NM–New Mexico Attorney General Hector Balderas today joined a coalition of 23
attorneys general in a lawsuit against Secretary of Education Betsy DeVos and the U.S.
Department of Education (ED), challenging their action to unlawfully repeal the 2016 “borrower
defense” regulations and replace them with regulations that do nothing more than benefit predatory
for-profit schools at the expense of defrauded students. The 2016 borrower defense regulations
established critical protections for student-borrowers who have been misled or defrauded by
predatory schools by providing borrowers an efficient pathway to get relief from their federal
student loans, and creating robust deterrents for schools that engage in predatory conduct. Under
the Trump Administration, ED repealed the 2016 regulations and replaced them with new
regulations that make it virtually impossible for victimized students to obtain financial relief, while
rolling back oversight over unscrupulous and predatory schools. In the lawsuit, the coalition argues
that ED’s decision to repeal and replace the Obama-era regulations violates the Administrative
Procedure Act (APA), and asks the court to vacate ED’s new regulations.
“New Mexican students should not be preyed upon by for-profit universities and then have no
relief from burdensome loans when they need help,” said Attorney General Balderas. “Stripping
away these protections from students who are trying to advance themselves and provide for their
families is shameful, and my office will continue to fight on their behalf.”
The Higher Education Act requires that the Secretary of Education issue regulations that provide
for a meaningful process for students to obtain federal student loan relief where their schools have
engaged in misconduct. Consistent with this Congressional mandate, in November 2016, ED
issued new borrower defense regulations that offered meaningful protections to defrauded student
borrowers. The regulations built on lessons learned from the collapse of Corinthian Colleges – a
predatory, for-profit chain of colleges that left tens of thousands of students across the nation in
need of relief. Specifically, the 2016 regulations provided misled and defrauded borrowers access
to a consistent, clear, fair, and transparent process to seek debt relief, and also protected taxpayers
by holding schools that engage in misconduct accountable. The regulations also ensured that
financially troubled schools provide financial protection to the government to ensure that, if they
fail, taxpayers would not be left holding the bag.
Despite these new protections, upon taking office Secretary DeVos sided with for-profit schools
and demonstrated public hostility to the 2016 borrower defense process. Just two weeks before the
2016 borrower-defense regulations were set to go into effect in 2017, the Trump Administration
unlawfully delayed them. A coalition of 20 attorneys general, including AG Balderas, successfully
sued Secretary DeVos over the illegal delay. In November 2019, after the Secretary’s failed delay
attempts, ED issued replacement borrower defense regulations that put the interests of predatory
schools ahead of student protections. The 2019 borrower defense regulations created a process
designed to thwart relief for defrauded students and shield predatory schools from being held
accountable.
In the lawsuit, filed in the U.S. District Court for the Northern District of California, the coalition
argues that ED’s repeal and replacement of the 2016 borrower defense regulations violates the
APA because:
• It is arbitrary and capricious. The decision to repeal and replace the 2016 rule was not
the product of reasoned decision making as required by the APA. In explaining its
rationale for the new regulations, ED rejected prior agency determinations going back
decades without explanation, grounded its analysis in fundamental misunderstandings,
failed to consider alternatives, and disregarded facts and circumstances.
• It does not comply with Congress’s requirement that the Secretary implement a
meaningful process for borrowers to obtain relief. Instead, it establishes an illusory
process that makes it practically impossible for students to qualify for borrower defense
relief. ED admits as much by acknowledging that only around 4 percent of borrowers
eligible for relief will actually get relief.
In filing this lawsuit, Attorney General Balderas joins the attorneys general of California,
Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island,
Vermont, Virginia, Wisconsin, and the District of Columbia

Raul Torrez

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