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19 State AGs File Lawsuit to Stop Betsy DeVos’s ‘Unjustified and Illegal’ Rollback of Rules for For-Profit Colleges

A coalition of 19 state attorneys general asked a federal court in Washington, D.C. to block the Department of Education (DoE) and Secretary Betsy DeVos from repealing a rule requiring for-profit schools to ensure their graduates are prepared for “gainful employment in a recognized occupation” and not left with a mountain of debt and no job prospects to help them repay it.

Under the “Gainful Employment” Rule, which was promulgated by the DoE in 2014, for-profit programs were required to maintain a minimum debt-to-earnings ratio for their graduates. Schools that dropped below that metric were required to publish warnings intended to alert current and prospective enrollees of the program’s disproportionate costs and benefits. Repeat or flagrant offenders became ineligible to accept Title IV aid from students.

Attendees of for-profit institutions are responsible for more than 98-percent of borrow defense claims, which are complaints submitted by students believed to have been defrauded by their school.

The DoE repealed the gainful employment rule in 2019, with DeVos claiming that it was “fundamentally flawed” and unfairly targeted for-profit colleges. The Department’s new rules, which are scheduled to become effective next week, do away with the vast majority of regulations aimed at preventing students and taxpayers from investing in low-quality programs.

According to the lawsuit, the new rules are “arbitrary, capricious, and contrary to law” and will harm the plaintiff states in four specific ways.

“First, because of the Repeal Rule, students are more likely to waste state-aid given for higher education by using that aid to attend worthless programs operated by for-profit institutions,” the lawsuit stated. “Second, Plaintiff States’ investment in informed and productive residents, accomplished through state-funded institutions of higher education, will be harmed by increased competition from substandard programs. Third, the students who will again enroll in substandard and predatory programs will call upon Plaintiff States to seek redress for the attendant harms. Fourth, students who are now more likely to enroll in substandard for-profit programs will be unable to fully contribute to Plaintiff States’ economies.”

New York Attorney General Letitia James (D), one of the filers of the complaint, said the attempt to repeal the gainful employment rule was illustrative of the Trump administration’s penchant for prioritizing special interest groups over citizens.

“Betsy DeVos’s unjustified and illegal repeal of the Gainful Employment rule is yet another example of the Trump Administration’s continued efforts to dismantle critical safeguards protecting students and taxpayers in order to further the interests of for-profit colleges,” James said in a statement. “We are standing up for students and calling out the Department of Education’s improper repeal of a rule that plays a vital role in ensuring students can make informed decisions about their education. The Trump Administration’s actions here are just another example of putting special interests ahead of student interests.”

Read the full lawsuit below.

NY Devos Complaint by Law&Crime on Scribd

[image via Mark Wilson/Getty Images]

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Jerry Lambe is a journalist at Law&Crime. He is a graduate of Georgetown University and New York Law School and previously worked in financial securities compliance and Civil Rights employment law.