ATTORNEY GENERAL HERRING CONTINUES FIGHT TO PROTECT STUDENT BORROWERS

~ Herring supports challenge to unlawful Trump-era Borrower Defense Rule that repealed protections for student borrowers ~

RICHMOND(July 29, 2021) – Attorney General Mark R. Herring has joined 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, supports the New York Legal Assistance Group's (NYLAG) lawsuit challenging action taken by the Trump administration's Department of Education that unlawfully repealed and replaced federal "borrower defense” regulations. A year ago, Attorney General Herring filed suit against then Secretary of Education Betsy DeVos and the U.S. Department of Education challenging their action to unlawfully repeal the 2016 Borrower Defense Rule.

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.

"Time and again the Trump Department of Education shirked its responsibility to protect student borrowers, instead choosing to protect predatory for-profit colleges,” said Attorney General Herring. "The current, Trump-era Borrower Defense Rule does nothing to protect Virginia student loan borrowers and leaves them optionless if they are defrauded by a for-profit college. The Commonwealth is home to more than a million student loan borrowers and I will do everything I can to ensure that strong student borrower protections are reinstated.”

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. In 2019, the Department of Education under the Trump administration 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.  

Attorney General Herring and his colleagues' amicus brief supports NYLAG's arguments that that the Trump administration's 2019 borrower defense rule is arbitrary and capricious and therefore should be eliminated. It further supports NYLAG's allegations that in rescinding and replacing the 2016 borrower defense rule, the Department of Education relied on inaccurate, unsupported, and inconsistent assumptions, among other arguments. 

Herring's Previous Work Fighting to Protect Student Borrowers

In October 2018, Attorney General Herring announced that a federal judge had rejected the Trump administration's challenge to the Borrower Defense Rule, ordering its immediate implementation for students nationwide. This ruling followed a victory Attorney General Herring won in federal court after he and a coalition of state attorneys general challenged the U.S. Department of Education's plan to abruptly rescind its Borrower Defense Rule which was designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans. The immediate implementation of the Borrower Defense Rule meant that the U.S. Department of Education had to automatically discharge $381 million in loans for students whose schools closed.

Attorney General Herring has taken major actions against for-profit colleges for misleading students. In November 2015, for-profit education company Education Management Corporation announced it would significantly reform its recruiting and enrollment practices and forgive more than $2.29 million in loans for approximately 2,000 former students in Virginia through an agreement with the Attorney General and a group of state attorneys general. Nationwide, the agreement required the for-profit college company to forgive $102.8 million in outstanding loan debt held by more than 80,000 former students.

In December 2016, the Attorney General announced that more than 5,000 Virginia students formerly enrolled in schools operated by Corinthian Colleges, Inc. may be eligible for loan forgiveness. This came after the U.S Department of Education found that Corinthian College and its subsidiaries published misleading job placement rates for many programs between 2010 and 2014. Following this announcement, Attorney General Herring urged Secretary DeVos and the Department of Education to follow through on their commitment to cancel student debt for students in Virginia and around the country who were victimized by Corinthian Colleges' practices.

Attorney General Herring announced in January of 2019 that he and 48 other attorneys general reached a settlement with for-profit education company Career Education Corporation (CEC). The terms of the settlement required CEC to reform its recruiting and enrollment practices and forgo collecting about $493.7 million in debts owed by 179,529 students nationally. In Virginia, 3,094 students will receive relief totaling $8,022,178.

Joining Attorney General Herring in filing the amicus brief are the attorneys general of California, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia.

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