Nessel supports challenge to borrower defense rule that repealed protections for student borrowers

Michigan Attorney General Dana Nessel joined a multistate amicus brief Thursday advocating for the rights of federal student loan borrowers. The brief, which was filed in the U.S. Court of Appeals for the Second Circuit, supports the New York Legal Assistance Group’s (NYLAG) lawsuit challenging action taken by the Trump administration’s Department of Education (DOE) that unlawfully repealed and replaced federal “borrower defense” regulations.

”Borrower defense” is the process by which students can seek relief from their federal student loans when they have been defrauded by their school. The Trump administration scrapped previous borrower defense regulations that protected students from deceitful practices with new regulations that favor predatory for-profit schools and all but shut the door on students seeking debt relief. In its lawsuit, NYLAG, a legal aid organization that is represented by the Project on Predatory Student Lending and Public Citizen Litigation Group, argues that the Trump administration’s 2019 Borrower Defense Rule is arbitrary and capricious and must be stricken. 

“It is absolutely critical that student borrowers are protected against unfair practices,” Nessel said. “Stripping away these protections makes it nearly impossible for students to get the relief they’re owed in instances where predatory for-profit institutions exploit their interest in higher education. My colleagues and I are fighting to ensure missteps taken under the previous administration are overturned.”

The federal Higher Education Act requires the U.S. Education Secretary to issue “borrower defense” regulations that provide a pathway for students to discharge federal student loan debt if they were victimized by a school. In 2016, the Obama administration’s Department of Education created strong protections for student-borrowers who were defrauded by predatory for-profit colleges by establishing a fair and transparent borrower defense process for student loan debt relief. Following the change in presidential administrations, in 2019, DOE rescinded those regulations and replaced them with new rules designed to prevent defrauded students from obtaining loan relief and shield predatory schools from being held accountable for their misconduct.   

Thursday’s amicus brief supports NYLAG’s arguments that the Trump administration’s 2019 borrower defense rule is arbitrary and capricious and therefore should be eliminated. It further supports NYLAG’s allegations that, in rescinding and replacing the 2016 borrower defense rule, DOE relied on inaccurate, unsupported, and inconsistent assumptions, among other arguments.

Early last year, Nessel joined 19 other attorneys general in sending a letter to Congress commending lawmakers’ efforts to reject the 2019 Borrower Defense Rule proposed by the DOE. Later, Nessel joined 22 other attorneys general in filing a lawsuit against then Secretary of Education Betsy DeVos and the DOE challenging their action to repeal Borrower Defense regulations.

Joining Nessel in filing this brief are the attorneys general of California, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.