Federal Judge Upholds Most of DeVos’ Stricter Borrower Defense Rules
Owen Daugherty
March 18, 2021
Former Education Secretary Betsy DeVos notched a legal victory on Wednesday as a federal judge mostly upheld stricter standards put in place under her administration for debt relief for borrowers who were subject to fraud by their institutions.
While U.S. District Judge Lorna Schofield largely ruled in DeVos’ favor on the rewrite of the Obama-era borrower defense rules, she rejected the three-year statute of limitations on borrower claims included in the policy implemented under DeVos when she was at the helm of the Department of Education (ED), ruling that the administration illegally added the three-year deadline for when borrowers must apply for loan forgiveness, according to Politico.
The decision Wednesday marks the latest chapter in the borrower defense saga that has seen DeVos’ rewritten rules face numerous legal challenges, this one coming from the New York Legal Assistance Group and represented by both Public Citizen and Harvard Law School’s Project on Predatory Lending, who argued the final rules from DeVos were arbitrary and capricious.
The final rule from DeVos created a much higher burden of proof for student borrowers to show they were defrauded by their institutions. Under the Obama rule, a student needed to show a substantial misrepresentation by the school to receive relief. DeVos’s rule requires borrowers to show they suffered financial harm from their institution’s misconduct and that the college knowingly made deceptive or false statements.
