California AG Calls For Department Of Education To Withdraw Its Proposed Borrower Defense Rule | Press Release

AG Becerra Calls on Department To Begin New Process After Documents Produced by Project On Predatory Student Lending Show Proposed Rule Includes Fundamental Lie

BOSTON – California Attorney General Xavier Becerra is calling on the Department of Education to withdraw its proposed Borrower Defense rule immediately and begin the public process again, citing documents released last week by the Project on Predatory Student Lending that show the Department’s proposed rule is based on a lie.Attorney General Becerra submitted a letter to the Department of Education yesterday, urging it to take action.“Secretary Betsy DeVos has proven yet again that she's out of touch with the long-standing practice of allowing borrowers to submit claims when they suspect fraud. I urge the Department of Education to withdraw its proposed rule immediately. If the Department proceeds with this flawed, harmful and erroneously justified regulation, it should extend the comment period to a minimum of 60 days to allow for the submission of detailed comments from the public.” California Attorney General Xavier Becerra said in a statement.His call for the Department to withdraw the rule follows the Project on Predatory Student Lending’s comment submitted last week to the Department of Education. The comment includes Department documents that show that the Department’s Notice of Proposed Rulemaking lies about how it has historically interpreted the Borrower Defense Rule, and that this lie infects the Department’s estimates of how much the rule will cost.“Not only does the proposed borrower defense rule place an undue burden on students who were cheated, it was misrepresented to the public and is based on a lie. The public cannot be expected to comment on these rules when they are based on utter falsehoods and intentionally faulty calculations. The Department should rescind this proposed rule immediately and start over based on accurate information,” said Eileen Connor, Director of Litigation for the Project on Predatory Student Lending at the Legal Services Center of Harvard Law School. “We thank Attorney General Becerra for continuing to stand up against predatory for-profit colleges and the Department policies that enable them.”First promulgated in 1994, the original Borrower Defense regulation says that borrowers are eligible for discharge of federal student loans if their school violated their rights under state law. Under its latest proposed rule, the Department is considering allowing only borrowers who had defaulted on their loans and were being threatened with wage garnishment, tax refund offset, or other extreme forms of collection to assert borrower defenses. The Department’s proposal says that this restrictive interpretation is how the Department had interpreted the rule between 1994 and 2015, when it claims the Obama administration reinterpreted it to provide for “affirmative claims.”The Department’s own records prove that this is false. Documents show that in 2015, the Department affirmed, rather than changed, its long-standing interpretation that borrowers may seek loan cancellation based on school misconduct at any time, whether in repayment, forbearance, or default. Documents from the Department's Office of General Counsel show that this was the case at least as far back as 2000.“Agencies are legally obligated to give the public a meaningful opportunity to comment on proposed rules. A comment process isn’t meaningful if the agency mischaracterizes what it’s planning to do and how that plan differs from the agency’s prior practices. This proposal should be withdrawn—if not permanently, then at least until the Department of Education can prepare an honest assessment of the new rule’s costs and benefits,” said Jack Lienke, Regulatory Policy Director, Institute for Policy Integrity at New York University School of Law.The emails were published by the Project on Predatory Student Lending in an initial public comment on the rule, which was also submitted to the Office of Management and Budget’s Office of Information and Regulatory Affairs. To read the Project’s comment and the Department’s documents, click here.About the Project on Predatory Student LendingEstablished in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students and taxpayers.The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.