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NC AG Says Dept of Education Secretary DeVos Puts Predatory For-Profit Schools Ahead of Defrauded Students With Proposed Borrower Defense Regulations

By on September 3, 2018

North Carolina Attorney General Josh Stein recently criticized the U.S. Department of Education (Department) and Secretary of Education Betsy DeVos for putting the interests of predatory for-profit schools ahead of the students she is sworn to protect. Secretary DeVos has proposed changes to the Department’s borrower defense protections that, if adopted, would make it more difficult for defrauded students to obtain financial relief, while giving unscrupulous and predatory schools unwarranted protections.

“Secretary DeVos’ priorities are upside down,” said Attorney General Josh Stein. “We need to protect students, not for-profit colleges. When students borrow money to pay for higher education, they are investing in their future. They deserve fair rules that will protect them.”

Borrower defense is the process by which students who have been defrauded by their schools can have their federal student loans discharged. This rule was used by students after Corinthian College collapsed.

Attorney General Stein outlined a number of issues with the Department’s proposal, including:

  • Imposing new, more stringent burdens on students to establish a claim and get relief.
  • Excluding state attorneys general from efforts to protect students and disregarding the states’ role in higher education.
  • Requiring students to default on their loans before they can seek relief from fraudulent loans.
  • Providing an unreasonable and inadequate timetable for borrowers to submit claims.
  • Stopping the practice of discharging loans for groups of students who have been similarly defrauded, and instead requiring each student to file individual claims.
  • Granting only partial relief to the vast majority of borrowers with successful claims.
  • Allowing schools to use mandatory arbitration rather than the courts. Mandatory arbitration will deter students from bringing claims and will prevent critical information about filed claims from ever coming to light.

Attorney General Stein is joined in writing this letter by the Attorneys General of California, Massachusetts, Connecticut, Delaware, Washington, D.C., Hawaii, Illinois, Iowa, Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington.

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