July 6, 2017

Attorney General George Jepsen today announced that Connecticut has joined 18 other attorneys general in a federal lawsuit against Secretary of Education Betsy DeVos and the United States Department of Education that seeks to stop the department's abandonment of new rules to hold abusive colleges and universities accountable for misconduct and to relieve their students from federal loan indebtedness incurred as a result of misconduct.

The lawsuit – filed today in the U.S. District Court for the District of Columbia – alleges that Secretary DeVos' notice, issued on June 14, purporting to delay indefinitely the effective date of large portions of the Borrower Defense Rule, violated the Administrative Procedures Act because it effectively canceled a properly promulgated regulation without soliciting, receiving or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process.

The Borrower Defense Rule was promulgated in November 2016 after an extensive negotiated rulemaking process in which the Department of Education reviewed over 10,000 comments, including those of students, postsecondary institutions, state government officials and consumer advocates. It was scheduled to take effect on July 1, 2017.

"For several years now, Connecticut has been involved in a multistate investigation of the predatory practices of certain for-profit colleges and universities," said Attorney General Jepsen. "Our investigation, as well as inquiries conducted by Congress, have demonstrated how some of these institutions seek to maximize their access to federal taxpayer dollars by luring in students with misleading promises about the quality of the education they will receive and the prospects for their futures following completion of a program. These students end up in crushing debt, with worthless diplomas, while the for-profit colleges rake in exorbitant profits on the taxpayer dime."

Attorney General Jepsen continued, "It is exactly this sort of abuse that the Borrower Defense Rule addresses. But despite the extensive and proper effort put into crafting the rule, the Trump Administration has unilaterally and illegally suspended its implementation. Today, I am joining with my colleagues to ask the court to do what is right and legal and to stop Secretary DeVos and President Trump from causing further injury to students who have been deceived and misled."

In the complaint, the states argue that they have an interest in the timely implementation of the Borrower Defense Rule, which enhances the effectiveness of state enforcement efforts, improves the remedies available for violations of state law, deters misconduct by educational institutions and protects the wellbeing of the states’ respective residents. The rule provides a joint federal and state process for protecting students and providing relief to injured students. They argue that delaying the rule's implementation indefinitely deprives the states of benefits to their enforcement systems and injures the states’ residents by removing the rights and protections provided by the rule. State attorneys general participated in and served on the negotiating committee that developed the Borrower Defense Rule.

The federal government provides financial assistance in the form of loans to students pursuing higher education under Title IV of the Higher Education Act of 1965. These programs are designed to provide critical assistance to prospective students and expand access to higher education to students who could not otherwise afford to pursue a degree or certificate. They have become a significant source of revenue for many postsecondary institutions, including for-profit schools.

For-profit schools receive the vast majority of their revenue from the federal government in the form of federal student loans and grants. In 2009, the 15 publicly traded for-profit education companies received 86 percent of their revenues from taxpayer-funded loans. Taxpayers invested $32 billion in for-profit schools in the 2009-10 academic year, more than the annual budget of the U.S. Department of Justice and the U.S. Department of State during that time period.

The states, by and through their Attorneys General, have initiated numerous investigations and enforcement actions against for-profit schools for violations of the states’ consumer protection statutes, alleging deceptive and coercive tactics used in recruitment efforts that typically target low-income and minority students and veterans. Many of these actions have resulted in judgments against the schools.

In addition to Connecticut, and led by Massachusetts Attorney General Maura Healey, other attorneys general joining today's lawsuit as plaintiffs include California, Delaware, Hawaii, Iowa, Illinois, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and the District of Columbia.

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