WASHINGTON, D.C. — North Carolina has joined 16 other states and the District of Columbia in a lawsuit against the U.S. Department of Education and Secretary Betsy DeVos over the recent suspension of rules that, among other things, fast-tracked student loan forgiveness for people defrauded by Corinthian Colleges and other schools that go bankrupt or commit fraud.
In a filing in U.S. District Court in Washington, D.C., the states said the department broke federal law in announcing a delay of the new rules with limited public notice and opportunity to comment.
The department is also facing another suit from a group of for-profit schools that say the new rules needed to be narrowed because they could open the door for meritless lawsuits and force closure of some vocational schools.
Last month DeVos pressed pause on the rules, due to take effect on July 1, saying they needed to be reset. She established a committee to examine them and make recommendations.DeVos has said accelerating the debt cancellation process would put taxpayers on the hook for significant costs, and a delay is needed while current litigation in California over the rules works through the legal system.”With this ideologically driven suit, the state attorneys general are saying to regulate first, and ask the legal questions later,” said Education Department Press Secretary Liz Hill.
The rules were finalized in the last days of the administration of President Barack Obama, who overhauled federal student lending, specifically targeting for-profit, career colleges.
After Corinthian, a for-profit chain, collapsed in 2015 amid government investigations into its post-graduation employment rates, the administration began drafting rules to help students caught with outstanding loans they had taken out for Corinthian tuition.
The attorneys general for California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Massachusetts, Maryland, Minnesota, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, D.C., all Democrats, also signed onto the lawsuit.
They said the department and DeVos were using the pending litigation as “a mere pretext” to repeal the rules and replace them with one that “will remove or dilute student rights and protections.”The $1.4 trillion student loan industry became a hot-button issue in the 2016 presidential campaign. Democrats sought to preserve Obama’s policies, while Republicans such as then-candidate Donald Trump said the government should “get out of the business” of student lending.
