PhotoEducation Secretary Betsy DeVos has ordered a "regulatory reset" of rules intended to protect students from predatory for-profit colleges. But critics say the reset puts the interests of for-profit colleges ahead of those of students.

"The message the Trump Administration is sending our students is coming into focus: look out, the fox is guarding the henhouse,” said California Attorney General Xavier Becerra. But Becerra said he was not surprised by the action.

“I cannot say I am surprised that President Trump’s Administration has decided not to protect students from predatory for-profit colleges. It was Trump University that had to pay $25 million for offering sham courses, hiring unqualified instructors, and lying to students about learning secrets to real estate success," Becerra said in an email.

DeVos said the "reset" is intended to allow time for the department "to develop fair, effective and improved regulations to protect individual borrowers from fraud, ensure accountability across institutions of higher education and protect taxpayers."

"My first priority is to protect students," said DeVos. "Fraud, especially fraud committed by a school, is simply unacceptable. Unfortunately, last year's rulemaking effort missed an opportunity to get it right. The result is a muddled process that's unfair to students and schools, and puts taxpayers on the hook for significant costs."

"A craven attempt"

But Julie Murray of Public Citizen's litigation group said the delay is "a craven attempt to avoid the agency’s legal obligations to enforce" the rules enacted during the Obama Administration.

The rules include a prohibition on the use of forced arbitration clauses in many student enrollment contracts. These clauses require students to submit any dispute that might later arise between the students and the institution to binding arbitration, a private process with little right to appeal, instead of a court of law. The rules also provide new protections for students asserting defenses against repayment of their federal loans based on fraud or other misconduct by the students’ schools.

DeVos said the "reset" will not delay the processing of claims by students at now-defunct schools who are seeking to have their loans forgiven.

"Nearly 16,000 borrower defense claims are currently being processed by the Department, and, as I have said all along, promises made to students under the current rule will be promises kept," DeVos said. "We are working with servicers to get these loans discharged as expeditiously as possible. Some borrowers should expect to obtain discharges within the next several weeks."

Colleges raise concerns

DeVos said colleges "of all types" have raised concerns about the new regulations, complaining about "excessively broad definitions of substantial misrepresentation and breach of contract, the lack of meaningful due process protections for institutions and 'financial triggers.'"

Washington Attorney General Bob Ferguson called the decision to delay the new rules "deeply troubling." 

He said the "protections delayed by the Trump Administration and Secretary DeVos" include:

  • Prohibitions on schools forcing students to pursue complaints in arbitration rather than in court; 
  • Prohibitions on schools requiring students to waive participation in class action lawsuits; and
  • The provision of automatic relief and group relief for defrauded federal student loan borrowers in certain circumstances, including following legal actions by state attorneys general. 

“As findings of widespread fraud and misrepresentation by Corinthian Colleges make clear, we need to do more to protect students who took out loans to pay for education they did not receive, and to ensure that there are meaningful avenues for relief when they are left paying for promises that never materialized," Ferguson said. 

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