Attorney General Bonta Files Amicus Brief Supporting Challenge to Unlawful Trump-Era Borrower Defense Rule That Repealed Protections for Student Borrowers

Thursday, July 29, 2021
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In addition to supporting NYLAG's suit, CA DOJ co-led a 2020 multistate lawsuit challenging the Trump-era Borrower Defense Rule

OAKLAND – California Attorney General Rob Bonta co-led a multistate amicus brief advocating for the rights of federal student loan borrowers. The brief, which was filed in the U.S. Court of Appeals for the Second Circuit Court, supports the New York Legal Assistance Group's (NYLAG) lawsuit challenging action taken by the Trump Administration's Department of Education (ED) that unlawfully repealed and replaced federal borrower defense regulations. Borrower defense is the process by which students can seek relief from their federal student loans when they have been defrauded by their school. The Trump Administration scrapped previous borrower defense regulations that protected students from deceitful practices with new regulations that favor predatory for-profit schools and all but shut the door on students seeking debt relief. In its lawsuit, NYLAG, a legal aid organization that is represented by the Project on Predatory Student Lending and Public Citizen Litigation Group, argues that the Trump Administration's 2019 Borrower Defense Rule is arbitrary and capricious and must be stricken. California's amicus brief supports NYLAG's case, which makes a number of the same allegations as California’s ongoing 2020 lawsuit challenging these same Trump-era regulations in the Northern District of California.

“The Trump Administration callously and illegally put the interests of for-profit institutions before the interests of America's students. These students deserve a fair process of obtaining relief on their federal student loans, and for-profit schools must be deterred from and held to account for their predatory behavior,” said Attorney General Bonta. “Thousands of Californians were deceived by predatory schools that made false promises about job placement rates, students' ability to obtain a professional license after graduating, or the cost of their degree program. Instead, these students were left with limited career options and overwhelming federal loan debt. As the People's Attorney, I'm doing everything in my power to bring rapid relief. That's why we are supporting NYLAG's case, and it is why we are co-leading an ongoing multistate challenge against the Trump Administration's Borrower Defense Rule. It's time to right these wrongs so that students pursuing the California dream aren’t financially ruined if they fall victim to a predatory for-profit school.”

The federal Higher Education Act requires the U.S. Education Secretary to issue borrower defense regulations that provide a pathway for students to discharge federal student loan debt if they were victimized by a school. In 2016, the Obama Administration's Department of Education created strong protections for student-borrowers who were defrauded by predatory for-profit colleges by establishing a fair and transparent borrower defense process for student loan debt relief. Following the change in presidential administrations, in 2019, ED rescinded those regulations and replaced them with new rules designed to prevent defrauded students from obtaining loan relief and shield predatory schools from being held accountable for their misconduct.

In its lawsuit, NYLAG argues that that the Trump Administration's 2019 Borrower Defense Rule is arbitrary and capricious and therefore should be eliminated. The lawsuit alleges that in rescinding and replacing the 2016 Borrower Defense Rule, ED relied on inaccurate, unsupported, and inconsistent assumptions, among other arguments. 

In July 2020, the California Department of Justice, co-leading a multistate coalition of 23 state attorneys general, also sued then U.S. Education Secretary Betsy DeVos and ED. Alleging many of the same points as the NYLAG suit, the California Department of Justice also contends that the Trump-era regulations violated Congress' mandate that ED create a meaningful borrower defense process, not an illusory one designed to thwart relief to injured students. That lawsuit is pending before the U.S. District Court for the Northern District of California.

In filing the brief, Attorney General Bonta joins the attorneys general of Massachusetts, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia. 

A copy of the brief is available here.

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