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Betsy DeVos wants another chance to delay rule meant to protect defrauded student-loan borrowers

Betsy DeVos wants another chance to delay rule meant to protect defrauded student-loan borrowers
Education Secretary Betsy DeVos testifies during a hearing on Capitol Hill in June. (Carolyn Kaster / Associated Press)

The Trump administration on Friday asked the court for another chance to delay an Obama-era policy meant to boost protections for students defrauded by for-profit schools.

The request came two days after the court ruled that Education Secretary Betsy DeVos' move to freeze the regulation known as Borrower Defense was “arbitrary and capricious.” That decision dealt a severe blow to her efforts to ease regulations on the for-profit college industry.

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Adam Pulver, an attorney with advocacy group Public Citizen, said defrauded students are facing “continuing everyday harm” and asked the court that the delayed regulation be enforced immediately. The case was brought by Public Citizen and by Democratic attorneys general from 19 states, including California, and the District of Columbia.

But lawyers for the Department of Education asked Judge Randolph Moss to give the department a chance to correct the mistakes the court identified in how the delay was put in place. It also asked that if the court rules the Obama regulation must take effect, it grant the department 60 days to prepare.

Moss did not say when he would issue a ruling.

Toby Merrill — a litigator at Harvard University's Project on Predatory Student Lending, which represents defrauded students — said that if Moss rules that the regulations must take effect, students would win some important protections: not having to sign away their right to sue the school, getting loans automatically discharged if their school was closed mid-program and if they were unable to transfer their credits to a similar program, and being eligible for forbearance when applying for loan discharges.

The Obama administration went hard after the for-profit sector, tightening regulations and spending more than $550 million to forgive the loans of defrauded students. DeVos said that system was unfair to taxpayers and set out to rewrite those rules.

Critics accused DeVos of looking out for industry interests. They point to the fact that she has hired for-profit-school insiders to top positions at the Education Department.

But Rick Hess, director of education policy at the conservative American Enterprise Institute, said DeVos is “trying to strike a healthier balance between protecting students and ensuring that taxpayers don't get ripped off.”

DeVos also put in place a new system of compensating defrauded students for their losses. In a break with the Obama administration's practice of fully forgiving student loans, DeVos in December rolled out a new tiered relief system, in which student loans are forgiven based on the borrowers’ earnings, regardless of whether they were able to find jobs in the fields they had studied.

That tiered relief system was frozen as part of a separate lawsuit. It was uncertain whether Wednesday's court ruling would have any effect on it.

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