Attorney General Hector Balderas

AG News:

SANTA FE — Attorney General Hector Balderas 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, the attorneys general supported efforts to reject the U.S. Department of Education’s 2019 Borrower Defense Rule pursuant to a resolution of disapproval under the Congressional Review Act.

“New Mexican students trying to make a better life for themselves and their families should never be the victim of predatory lending, and this attempt to strip them of the protections they need is unacceptable,” Balderas said. “The safety and welfare of our students is our priority, and we will continue to fight to protect them.”

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 Department’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 accountable that engage in misconduct.

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.

Investigations and enforcement actions by attorneys general have revealed the misconduct of numerous for-profit schools and helped secure relief for tens of thousands of student borrowers. 

Attorney General Balderas was joined in sending the letter by the attorneys general of California, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Vermont, Virginia, Washington, and the District of Columbia.