State Attorneys General Spar with DeVos Over For-Profit Lending Regulation

Online for-profit colleges have been under scrutiny for predatory lending practices.

by David Hurst, The Tribune-Democrat, Johnstown, Pa. / July 14, 2017 0
Legal files on an attorney's desk. Shutterstock

(TNS) — Pennsylvania Attorney General Josh Shapiro said he had good reason last week to join 17 other states in filing a lawsuit against Secretary of Education Betsy DeVos, who rescinded regulations that protected students from "deceptive practices."

"Pennsylvania students have an extraordinary amount of debt -- the third highest in (the United States) -- and I think we need federal regulations in place to protect students and loan holders from these predatory practices we often see from for-profit colleges," Shapiro told The Tribune-Democrat during a Johnstown stop Tuesday. "I sued her to get those protections back in place."

The guidelines, established last year, were set to go into effect this summer until DeVos blocked them, calling the plan "muddled."

Attorneys general of Massachusetts, California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Rhode Island, Washington, Vermont, Virginia and the District of Columbia all joined Pennsylvania in the lawsuit filed in U.S. District Court in Washington last week.

The guidelines to protect students, dubbed the Borrower Defense Rule, were established last year in the wake of a high-profile for-profit college's bankruptcy and collapse.

That school system, Corinthian Colleges, had 91 schools across the country, including a technology school in Blairsville.

The school was ordered to repay students across the country after spending years of marketing to them using inflated job placement figures, promoting career programs they didn't actually offer -- and then using unlawful practices to collect on their loans from students, including barring them from attending class if they were behind on payments, a court judgment shows.

"Fraud, especially fraud committed by a school, is simply unacceptable. Unfortunately, last year's rule-making effort missed an opportunity to get it right," DeVos said. Critics of the Borrower Defense Rule, including a group of for-profit California colleges that backed DeVos' decision, have called the new student protections too burdensome.

Pennsylvania had several hundred for-profit colleges operating in the state before they began facing closer scrutiny the past few years.

Another for-profit that had a large Pennsylvania presence in recent years, ITT Tech, was under heavy fire from leaders in several states when the school abruptly closed in September.

David Hurst is a reporter for The Tribune-Democrat. He can be reached at (814) 532-5053. Follow him on Twitter @TDDavidHurst and Instagram @TDDavidHurst.


©2017 The Tribune-Democrat (Johnstown, Pa.), distributed by Tribune Content Agency, LLC.