Eric Schneiderman for Attorney General

“Consumerist: States Accuse Betsy DeVos of Failing to Protect Students from Sketchy For-Profit Schools”

October 18, 2017

As published by Consumerist, on October 17, 2017.

Education Secretary Betsy DeVos has made no effort to hide her support for the for-profit education industry, going so far as to hit “reset” on rules intended to protect students from schools that provide minimal education at a maximum cost. Now, a coalition of 18 state attorneys general are suing DeVos and the Dept. of Education, alleging they failed to hold these schools accountable.

In June, DeVos indefinitely delayed enforcement of the “Gainful Employment” rule, which requires that for-profit educators demonstrate their former students are making a living wage after they graduate.

The states, in a lawsuit [PDF] filed in the D.C. federal court, accuses DeVos and the Ed. Dept. of violating the Administrative Procedures Act (APA) by deciding she wouldn’t enforce the Gainful Employment rule without first going through all the steps required in changing a federal rule, like soliciting and responding to public comment.

Rule Changes

Since DeVos’ confirmation as Secretary of Education, she has taken a number of steps to either reset or amend rules aimed at protecting students from shady for-profit colleges.

A “Reset”
DeVos announced in June that the rules would be indefinitely delayed as she revealed her intention to establish rulemaking committees starting a process to“reset” the rules, claiming the previous rulemaking process “missed an opportunity to get it right,” resulting in a “muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs.”

The Gainful Employment rule, which took effect in July 2015, requires that for-profit educators demonstrate their former students are making a living wage after they graduate.

For-profit colleges are at risk of losing their federal aid should a typical graduate’s annual loan repayments exceed 20% of their discretionary income, or 8% of their total earnings. Discretionary income is defined as above 150% of the poverty line and applies to what can be put towards non-necessities.

So for example, say the typical recent graduate of a career education program earns $25,000. That student would need to average annual student loan payments less than $2,000, or the school would be at risk for losing federal financial aid.

While DeVos claimed the rule was created through a flawed process, her announcement calling for the rules to be reset didn’t mention that the regulation went through multiple rounds of rulemaking to address the objections raised by the for-profit industry, which has also repeatedly attempted — without success — to challenge this rule through the legal system.

Gainful employment was proposed in June 2011 and spent years being written, lobbied against, scuttled and rewritten. They were finalized in Oct. 2014, and then repeatedly battled over in court before finally going into effect in July 2015.

A Delay 
DeVos announced additional changes to the rule in August, revising the appeals process for schools that were found to offer programs in violation of the Gainful Employment rule.

The Department’s proposed changes — published in a notice in the Federal Register — appeared to tip the appeals process in the college’s favor.

Currently, a school has 60 days to appeal findings that their programs are in violation of the Gainful Employment rule. In the case of this year, schools had until March 1 to file; however, that date was pushed back to July 1. Under today’s announcement, schools found to be in violation of the rule now have until Feb. 1, 2018 to appeal.

In appealing these findings, a school must base their arguments on surveys that include at least 50% of program graduates or state data that uses at least 30 graduates of the program. Additionally, appeals based on surveys with few than 80% of a program’s graduates must demonstrate the respondents are representative of all grads.

Now when appealing, the schools would no longer have to meet a minimum percentage or number of represented students in their findings. Instead, DeVos would determine what is reliable on her own.

The Objections

As with a previously filed lawsuit by a coalition of AGs related to the Department’s action in delaying the Borrower Defense rules, today’s complaint asks the court to declare the agency’s actions unlawful.

The states claim that the Department’s action to delay and not enforce the rule is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” and “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right.”

According to the lawsuit, the Dept. violated the APA — the federal law which dictates the process for creating and revising regulations — when it issued notice of intent to reset or delay the rule and to issue a new regulation to replace the current rule.

While the APA allows an agency to engage in a negotiated rulemaking process to revise regulations, an agency may not change a regulation without engaging in a public, deliberative process and soliciting, receiving, and responding to comments from stakeholders and members of the public.

Yet, the AGs claim the Dept. and DeVos did just this in June by revoking “a duly promulgated and implemented regulation.”

The states contend that the Department’s notice operates as an amendment to or recision of the rule.

“The APA does not permit the Department to delay a duly promulgated and implemented regulation in order to draft a replacement, and it similarly does not permit the Department to delay or refuse to enforce a duly implemented rule without complying with the requirements of that statute,” the lawsuit states.

The suit also alleges that the Dept. essentially delayed portions of the Gainful Employment rule when it change the appeals process and pushed back the deadline to comply with the disclosure requirements.

Again, the states argue that the Department’s actions were in violation of the APA, as it did not ask for feedback or comments before making the change.

“By illegally delaying these disclosure deadlines and extending alternative appeal deadlines to all institutions affected by the Rule, the Department upended the Gainful Employment administrative scheme in its totality,” the lawsuit states.

The AGs seek to have the court order the Department and DeVos to implement the rule.

“From delaying student loan forgiveness to exposing students to misconduct by abusive schools, Secretary DeVos and the Department of Education have put special interests before students’ best interests,” New York Attorney General Eric Schneiderman said in a statement. “Failing to implement the Gainful Employment Rule leaves students vulnerable to exploitation and fraud. If Washington won’t defend students against predatory for-profit schools, we will.”

The states involved in the lawsuit against DeVos and the Department are California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Minnesota, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia.

A rep for the Dept. of Education essentially likened the lawsuit to a political stunt.

“This is just the latest in a string of frivolous lawsuits filed by Democratic Attorneys General who are only seeking to score quick political points,” press secretary Liz Hill told Consumerist in a statement. “While this Administration, and Secretary DeVos in particular, continue work to replace this broken rule with one that actually protects students, these legal stunts do nothing more than divert time and resources away from that effort.”