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After DeVry settlement, 19 AGs sue Ed Dept., DeVos on for-profit school rules

July 9, 2017

A day after the Federal Trade Commission began refunding students defrauded by DeVry University, attorneys general from 18 states and the District of Columbia raised further objections to widely-scrutinized for-profit colleges.

The coalition announced Thursday a concentrated lawsuit against Education Secretary Betsy DeVos and the U.S. Department of Education for violations of federal law in their reversal of Obama-era regulations meant to protect students and taxpayers. The rules were to take effect July 1 but were frozen in May.

The complaint regards “Borrower Defense” and “Gainful Employment” rules disincentivizing education companies from swindling students through misleading program marketing and widespread issuance of federal loans. The high-expense institutions have contributed vast sums to existing U.S. student debt.

“Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans,” Massachusetts Attorney General Maura Healey told the Wall Street Journal. “Her decision to cancel vital protections for students and taxpayers is a betrayal of her office’s responsibility and a violation of federal law. We call on Secretary DeVos and the U.S. Department of Education to restore these rules immediately.”

The Department reacted swiftly to the suit.

“With this ideologically driven suit, the state attorneys general are saying to regulate first, and ask the legal questions later—which also seems to be the approach of the prior administration that adopted borrower-defense regulations through a heavily politicized process and failed to account for the interests of all stakeholders,” DOE Press Secretary Liz Hill said in a statement.

Adtalem Global Education Inc ATGE 1.11%Strayer Education Inc STRA 2.64%Grand Canyon Education Inc LOPE 1.95%American Public Education, Inc. APEI 1.79% and Bridgepoint Education Inc BPI 1.88% stocks steadily declined on Thursday’s news but began to rebound Friday morning.

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