Betsy DeVos unlawfully trying to repeal Obama rules against for-profit college fraud: suit

The Massachusetts attorney general filed a lawsuit Thursday against Education Secretary Betsy DeVos over her agency's decision to halt new rules to erase loan debts for students who were defrauded by their colleges.

The borrower defense rules were finalized in October by the Obama administration and were set to go into effect July -- but DeVos put them on hold after for-profit colleges sued to block them, reported the New York Times.

DeVos has called the rules, which are the product of years of negotiation and review, "muddled" and "unfair," and she plans to set up a new committee and restart the entire process.

Attorney General Maura Healey, who filed the lawsuit in Federal District Court in Washington, attacked the Education Department's delay as a "mere pretext" for repealing and replacing rules that had already been finalized.

The state's lawsuit -- which was joined by 17 other states and the District of Columbia -- is seeking to restore the rules as adopted last year.

“Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans,” Healey said. “Her decision to cancel vital protections for students and taxpayers is a betrayal of her office’s responsibility and a violation of federal law.”

The rules went into place after hundreds of for-profit colleges -- such as Corinthian Colleges and ITT Technical Institute -- were accused of defrauding students before going out of business.

President Donald Trump agreed to pay $25 million shortly after his election to settle fraud claims filed by students at Trump University, which promised to teach real estate and marketing skills.

Borrowers were already permitted to apply for loan forgiveness if they attended schools that misled them or broke state law, and taxpayers were stuck with the unpaid debt.

Under rules frozen by DeVos, for-profit colleges would be required to assume some of that risk by offering financial collateral when they were at risk of closing.

The pause also makes it harder -- if not impossible -- for students to sue schools they accused of fraud.