Attorney General Herring says he’ll continue to fight to protect student borrowers

~ Herring joins coalition of attorneys general in commending Congressional effort to reject the U.S. Department of Education’s 2019 Borrower Defense Rule that would hurt students ~

RICHMOND (January 14, 2020) – Attorney General Mark R. Herring has joined a coalition of states in supporting Congressional efforts to reject a final rule by the U.S. Department of Education that fails to protect students and taxpayers from the misconduct of unscrupulous schools. In a letter to Congress, Attorney General Herring and his colleagues commended efforts to reject the U.S. Department of Education’s 2019 Borrower Defense Rule. Previously, Attorney General Herring won a victory in federal court after he challenged the U.S. Department of Education’s plan to abruptly rescind the 2016 Borrower Defense Rule.

“Time and again the Trump Administration has shown that it favors protecting for-profit colleges over protecting student borrowers,” said Attorney General Herring. “This new Borrower Defense Rule will hurt student borrowers and leave them without options to discharge their loans if they have been defrauded by one of these for-profit schools. I will continue to fight to make sure that for-profit colleges are held accountable and student borrowers are afforded the protections they deserve.”

According to the letter, the final rule provides no realistic prospect for borrowers to discharge their loans when they have been defrauded by predatory for-profit schools, and it eliminates financial responsibility requirements for those same institutions.

“If this rule goes into effect, the result will be disastrous for students while providing a windfall to abusive schools,” the letter states.

The U.S. Department of Education’s new rule would rescind and replace its comprehensive 2016 Borrower Defense Rule, which involved a thorough rulemaking process addressing borrower defense and financial responsibility, in which the views of numerous schools, stakeholders, and public commenters were involved. The 2016 Borrower Defense Rule provided defrauded borrowers with a transparent process to seek debt relief and protected taxpayers by holding schools that engage in misconduct accountable.

According to the letter, the Department’s new rule provides an unworkable process for defrauded students to obtain loan relief and will do nothing to deter and hold accountable schools that cheat their students. Instead of ensuring that borrowers are not bearing the costs of institutional misconduct, the Department’s new rule empowers predatory for-profit schools and cuts off relief to victimized students.

In October 2018, Attorney General Herring announced that a federal judge rejected the Trump Administration’s challenge to the Borrower Defense Rule, ordering its immediate implementation for students nationwide. This ruling followed a victory Attorney General Herring won in federal court after he and a coalition of state attorneys general challenged the U.S. Department of Education’s plan to abruptly rescind 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 immediate implementation of the Borrower Defense rule meant that the U.S. Department of Education had to automatically discharge $381 million in loans for students whose schools closed.

Attorney General Herring has taken major actions against for-profit colleges for misleading students. In November 2015, for-profit education company Education Management Corporation announced it would significantly reform its recruiting and enrollment practices and forgive more than $2.29 million in loans for approximately 2,000 former students in Virginia through an agreement with the Attorney General and a group of state attorneys general. Nationwide, the agreement required the for-profit college company to forgive $102.8 million in outstanding loan debt held by more than 80,000 former students.

In December 2016, the Attorney General announced that more than 5,000 Virginia students formerly enrolled in schools operated by Corinthian Colleges, Inc. may be eligible for loan forgiveness. This came after the U.S Department of Education found that Corinthian College and its subsidiaries published misleading job placement rates for many programs between 2010 and 2014. Following this announcement, Attorney General Herring urged Secretary DeVos and the Department of Education to follow through on their commitment to cancel student debt for students in Virginia and around the country who were victimized by Corinthian Colleges’ practices.

Attorney General Herring announced in January of 2019 that he and 48 other attorneys general reached a settlement with for-profit education company Career Education Corporation. The terms of the settlement required CED to reform its recruiting and enrollment practices and forgo collecting about $493.7 million in debts owed by 179,529 students nationally. In Virginia, 3,094 students will receive relief totaling $8,022,178.

Joining Attorney General Herring in sending today’s letter are the attorneys general of California, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Vermont, Washington, and the District of Columbia.