Lawsuit says DeVos should be forced to cancel loans for students at closed campuses
A lawsuit filed Tuesday against Education Secretary Betsy DeVos asserts that the Education Department — as required by an Obama-era regulation — is failing to cancel student loans for borrowers whose schools closed before students could earn their degrees.
DeVos had sought to cancel the entire regulation, which governs the circumstances under which borrowers can have their debt erased. But in a ruling last month, a federal court said the regulation must take effect.
During the Obama administration, officials argued that students should not be responsible for often crushing debt when they did not get the education they were promised, sometimes bilked by for-profit schools and deceptive marketing. DeVos argued that the Obama rule made it too easy for students to cancel their debt and said she intended to replace the rules with her own version to take effect next year. That process fell behind schedule, and the earliest the new rules will hit is July 2020.
In the meantime, the federal court said DeVos cannot simply ignore the version put in place by her predecessor.
Under one provision, the Obama rule directed the Education Department to proactively cancel debts of students whose schools or campuses close before they get their degrees. It did not require that students apply for or request the cancellation.
The suit was filed Tuesday by Housing and Economic Rights Advocates, a nonprofit legal service and advocacy organization, in US District Court for the Northern District of California. The housing group is represented by the National Student Legal Defense Network, which has challenged a series of DeVos moves.
The Education Department did not immediately respond to a request for comment.
People who attended school on about 1,400 campuses that closed between November 2013 and November 2015 may be eligible for immediate debt cancellation, the legal network said. Students are eligible for the immediate relief if they have not reenrolled within three years in another school that participates in the federal student loan program. So students in schools that closed after November 2015 still have time on the clock to reenroll and are not eligible for the automatic debt relief.
The legal defense network estimated that if the rule were fully implemented, it would result in $250 million in cancelled debt, spread across tens of thousands of borrowers.
‘‘The Department of Education seems determined to deny student borrowers the financial relief to which they are entitled,’’ said Aaron Ament, president of the network.