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Solvejg Wastvedt

Minnesota, 17 other states sue Betsy DeVos over student loan rules

Betsy DeVos
Education Secretary Betsy DeVos
Chip Somodevilla | Getty Images file

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Updated: 3:54 p.m. | Posted: 10:55 a.m.

Minnesota Attorney General Lori Swanson and officials from 17 other states and the District of Columbia say federal officials broke the law by delaying rules meant to protect federal student loan borrowers.

The lawsuit filed in federal district court Thursday says the U.S. Department of Education and Education Secretary Betsy DeVos violated the Administrative Procedure Act when they postponed rules set to take effect July 1.

The rules would have streamlined the process for students defrauded by their colleges to seek loan forgiveness. They also required colleges at risk of closure to provide a financial guarantee to cover potential losses to taxpayers.

"The new [rules] really gave some teeth to this law that had been on the books for 20 years," Swanson said. In a June 14 press release, the department said the rules were being postponed due to pending litigation challenging them.

"It is the Department's aim, and this Administration's commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow," DeVos said in the release.

In today's complaint, Swanson and the other plaintiffs say the department's reference to pending litigation is a pretext to dilute or eliminate the rules.

Swanson said the department should have allowed time for schools and students to weigh in.

"This is an important issue both for taxpayers in Minnesota as well as students ... We've had real cases in Minnesota where this comes into play," Swanson said.

Swanson prevailed in a lawsuit last year against two for-profit colleges, Globe University and the Minnesota School of Business. A Hennepin County district judge ruled the schools misled students about degree programs.

The suit filed Thursday asks the court to order the rules be implemented.

The Department of Education released a statement in response 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.