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Finding National Standards Lacking, States Step in to Protect Student Borrowers

Finding National Standards Lacking, States Step in to Protect Student Borrowers

NASFAA

Owen Daugherty, NASFAA Staff Reporter

November 19, 2020

 

As the Department of Education (ED), under Secretary Betsy DeVos, has chipped away at Obama-era policies and regulations intended to protect borrowers defrauded by institutions they attended, it has faced frequent lawsuits, many coming from state attorneys general (AGs) seeking to protect their residents.

From those that have taken issue with ED’s attempts to limit funds from the federal coronavirus relief package to only Title IV-eligible students to those that have objected to ED’s slowdown of loan forgiveness processing for borrowers subjected to fraud by their colleges, DeVos and the department have spent the better part of four years fending off lawsuits.

In fact, DeVos holds the dubious distinction of being the most-sued secretary in the history of the department, facing more than 455 lawsuits in her four years at the helm.

Robyn Smith, who currently works as of counsel with the National Consumer Law Center focusing on student loan cases and for-profit school issues, said the lawsuits ED has faced over the last several years are largely due to the department’s open hostility to regulations and the Obama-era programs it has sought to do away with.

She added that when a state files a lawsuit in an attempt to protect its citizens, in this case student loan borrowers who attended a school in the state, it’s sending a message to ED that enough is not taking place to protect borrowers at the federal level.

“When the federal government’s not acting, it’s states that often try to address the issues first,” she said.

Smith said the blame does not fall solely on ED, noting that accreditors of for-profit colleges should shoulder some of the responsibility as well when a school closes and students are saddled with debt and no degree to show for it.

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