Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

FOR IMMEDIATE RELEASE: 
Jun 29 2017

Rules protect federal student loan borrowers against predatory for-profit colleges

OLYMPIA — Attorney General Bob Ferguson today sought to protect student loan borrowers from predatory for-profit schools by moving to intervene in a federal lawsuit.

In California Association of Private Postsecondary Schools (CAPPS) v. DeVos, a group of private schools filed a lawsuit against the Department of Education, challenging a new Obama Administration rule that would protect student borrowers at for-profit schools.

In a motion filed today in the U.S. District Court for the District of Columbia, Ferguson seeks to join nine other state attorneys general in arguing that the rules deter colleges, including for-profit institutions, from violating consumer protection laws. Under the rules, a state attorney general’s successful litigation against a school can make its students eligible for student loan forgiveness.

The states argue the federal government cannot adequately defend the states’ interests in the lawsuit.

Secretary DeVos refuses to defend the new protections. On June 14, DeVos announced the Department of Education’s decision to delay implementation of the rules, known as the borrower defense regulations.

“These protections would empower state attorneys general to combat predatory for-profit colleges and protect student loan borrowers,” Ferguson said. “Secretary DeVos has made it clear she will not defend these critical rules.”

The Obama Administration approved the borrower defense regulations in November 2016. Before the delay, the protections were scheduled for implementation July 1.

Under the new protections, the Department of Education will automatically discharge the loans of borrowers whose school closed and who have not re-enrolled in another school within three years, rather than requiring each student to apply individually for discharge. This rule, which applies to any school closed on or after November 2013, allows for the discharge of an estimated $381 million in federal student loans.

The Obama rules protect taxpayers by shifting the risks of for-profit school loan defaults toward the schools themselves and away from students and their federal student loans.

The protections also require that for-profit schools clearly disclose lawsuits against them.

In addition, the protections prohibit schools from forcing students into arbitration or requiring them to waive participation in class action lawsuits.

Assistant Attorney General Jeff Sprung is handling the case for Washington state.

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The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.

 

Contacts:

Brionna Aho, Interim Communications Director, (360) 753-2727; brionna.aho@atg.wa.gov