Betsy DeVos Loses Lawsuit Regarding Student Loans

Unfortunately getting the government to forgive student loans isn’t always the easiest thing to do. Recently 19 states and the District of Columbia won a lawsuit they brought against Betsy DeVos’ department. This lawsuit involved Betsy DeVos department not implementing a rule set up by President Obama that protected borrowers who fell victim to for profit colleges predatory practices. These colleges allegedly used deceptive practices and told students they would get certain jobs if they got a degree from their college.

However when students applied for these jobs they were hit with the reality that these companies didn’t view their degrees as legitimate. Many borrowers did not get the jobs they were expecting, which left them with little or no income to pay back their student loans. The rule Obama set up has also been referred to as the ‘Borrower Defense rule.’ Under this rule if the government had a financial loss (as a result of having to forgive the student loans of borrowers that fell victim to certain college’s predatory practices), then these colleges would have to cover the costs of the government’s losses.

The Lawsuit

Initially the ‘Borrower Defense rule’ was set to take effect in July of 2017. However the California Association of Private Postsecondary Schools decided to sue the government because they did not believe the ‘Borrower Defense rule’ was valid. This caused the government to not put the ‘Borrowers Defense rule’ into effect when it was originally scheduled for in July 2017. In October 2017 Betsy DeVos’ department decided to provisionally set the date the rule would go into effect to July 1, 2018. In February of 2018 her department decided to delay the date the rule went into effect until July 1, 2019.

Recently U.S. District Judge Randolph Moss issued his ruling on the lawsuit. He ruled that the delays Betsy DeVos’ department implemented were invalid. As a result Betsy DeVos as Secretary of Education lost the lawsuit. However Moss’s ruling does not require the ‘Borrower Defense rule’ to be reinstated. Right now it appears as though there will be some type of remedies put in place, but only time will tell how everything works out.

Student Loan Forgiveness Plan

Having a student loan forgiveness plan can make things easier for borrowers. The student loan industry has seen numerous changes over the years. At Hope Credit we’re always researching the latest industry updates in order to keep our clients accurately informed. If you’re looking for more information about how the government forgives student loans or if you have questions about different options you may qualify for, we would be happy to talk to you. Feel free to contact us by clicking here.

 

Sources:

Friedman, Zach. (2018, September 17). Betsy DeVos Loses Lawsuit On Student Loan Forgiveness. Retrieved from https://www.forbes.com/sites/zackfriedman/2018/09/17/student-loans-lawsuit-devos/#66175bef6323

Harris, Andrew. M. & Flatley, Daniel. (2018, September 12). Betsy DeVos Loses Student Loan Lawsuit Brought by 19 States. Retrieved from https://www.bloomberg.com/news/articles/2018-09-12/devos-loses-states-suit-over-borrower-defense-rule-delay

Bloomberg. (2018, September 13). Betsy DeVos loses student loan lawsuit brought by 19 states. Retrieved from http://www.latimes.com/business/la-fi-student-loan-borrower-defense-20180913-story.html

Posted in Federal Legislation Watch, News.