Attorneys general of 23 states, led by California and Massachusetts, are suing Education Secretary Betsy DeVos over her revision of an Obama-era rule that was meant to help defrauded students of for-profit colleges seek debt relief.

“Once again, it shouldn't surprise you,” California AG Xavier Becerra said on a call with reporters. “It's sort of a bad old B-movie again. The Department of Education, Secretary DeVos didn't follow the rules in trying to promulgate this new rule — they didn't follow the administrative procedures act requirements.”

The lawsuit, filed in the U.S. District Court for the Northern District of California, argues that the Education Department (ED)’s decision to repeal the Obama-era regulations “violates the Administrative Procedure Act (APA)” and also asked the court to “require ED to reimplement the Obama-era processes and protections.”

Becerra added that the ED actions under DeVos “are arbitrary and capricious … they rigged the system against students, flat and simple — they rigged the system.”

The Department of Education provided the following comment: “This is yet another grandstanding, politically driven lawsuit meant to grab a cheap headline, and the media seems to always oblige. To any objective observer, our borrower defense rule clearly protects students from fraud, ensures they are entitled to financial relief if they suffered harm and holds schools accountable.”

History of borrower defense

Under existing law, borrowers with federal loans are eligible for loan forgiveness if a college or a university has misled them or engaged in other misconduct in violation of certain state laws.

In 2015, after several for-profit colleges went extinct amid scandals, the Obama administration implemented regulations such that defrauded students who made a successful claim would be granted full debt relief.

Becerra had previously sued DeVos in December 2017, pushing DeVos to grant promised loan relief to students who attended the now-defunct Corinthian Colleges.

DeVos modified the Obama-era rule in 2019, making it tougher to access relief and alleging that the Obama administration “weaponized” the policy.

“When borrower defense arrived in 1995, it ... was little used… in the 20 years from 1995 to 2015, fewer than 60 claims were filed,” she said during a previous hearing in front of the House Committee on Education and Labor. “Then the previous administration weaponized the regulation against schools it simply didn’t like. They applied the law in a discriminatory fashion. So since 2015, there has been a 5,000% increase in borrower defense claims.”