Statement from Oregon Attorney General Ellen Rosenblum:
“We had a very big victory yesterday in federal court—and it’s a crucial one for students who have been defrauded by for-profit schools. The decision keeps President Obama’s ‘Borrower Defense Rule’, which gives federal loan forgiveness to students who were misled by a for-profit school.”
The decision, filed yesterday in the U.S. District Court in Washington, D.C., is the result of a multistate lawsuit by 20 state attorneys general, alleging that the U.S. Department of Education violated federal law by abruptly rescinding its Borrower Defense Rule which was designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans.
The Borrower Defense Rule was finalized by the Obama administration in November 2016 after nearly two years of negotiations, following the collapse of Corinthian Colleges, a national for-profit chain. The rule was set to go into effect on July 1, 2017.
Without the protections of the Borrower Defense Rule, many students defrauded by for-profit schools are unable to seek a remedy in court. The rule also prohibits schools from enforcing mandatory arbitration agreements and class action waivers, which are commonly used by for-profit schools to thwart legal actions by students who have been harmed by schools’ abusive conduct.