For the millions of students struggling with college loans and trying to stay abreast of what’s happening on the loan front, here’s the latest news:
The U.S. Department of Education and Education Secretary Betsy DeVos lost a lawsuit this week related to lengthy delays in helping students get their federal loans discharged when colleges engage in misconduct.
The federal judge called USDE’s delays, “arbitrary and capricious,” and set a hearing for Friday to consider remedies, according to the 57-page ruling.
The 2017 lawsuit involved a coalition of 19 states and the District of Columbia – Florida was not a party – that focused on USDE rules designed to “protect student loan borrowers from misleading, deceitful, and predatory practices.” In those circumstances, students could seek loan discharges and wouldn’t have to pay back their loans.
The case focused extensively on for-profit college that have marketed to low-income and minority students who would be eligible for federal loans.
Some of colleges engaged in practices such as “coercive and harassing recruitment tactics, deceptive marketing, and misrepresentations about students’ future career prospects, completion rates, and the reputation or accreditation of the school,” the lawsuit stated.
In addition, “For-profit recruiters are trained to use aggressive tactics and often create a false sense of urgency to enroll. Some for-profit colleges train and encourage recruiters to identify prospective students in dire financial straits, and then use that fact to pressure the individuals to enroll.”
The lawsuit said students may be misled about how likely they are to land a job after graduating from a for-profit school.
The USDE’s rules were supposed to do several things to help students, court records show, including revising procedures for borrowers to seek loan discharges because of school misconduct; revising the process for students seeking other forms of debt relief, and requiring “financially risky” colleges to be prepared to cover losses to the government for discharges of and repayments for federal student loans.
But the department delayed those rules, leading to the lawsuit.
The states that sued are: California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, as well as the District of Columbia.