AGs Argue Trump-Era Student Borrower Defense Rule is Unlawful and Should Be Repealed

  • A group of 22 Democratic AGs, led by California AG Rob Bonta and Massachusetts AG Maura Healey, filed an amicus brief in the U.S. Court of Appeals for the Second Circuit in New York Legal Assistance Group (“NYLAG”) v. Cardona, Case No. 21-888, in support of NYLAG’s position that the Trump administration’s federal borrower defense rule, which made it harder for students to obtain debt relief, is arbitrary and capricious in violation of the Administrative Procedure Act.
  • The complaint alleged that, among other things, the Department of Education (“ED”) unlawfully delayed the implementation of Obama-era borrower defense regulations designed to help students seeking relief from their federal student loans because they have been defrauded by their schools. ED later repealed and replaced these regulations with the 2019 Borrower Defense Rule, which was allegedly based on inaccurate, unsupported, and inconsistent assumptions, including that borrowers submitted many frivolous applications for relief. The U.S. District Court for the Southern District of New York granted partial summary judgment to ED, and NYLAG appealed.
  • The amicus brief argues that the rule violates the Administrative Procedure Act because it was not promulgated through lawful agency decision making, including because it used illogical and unsupported contentions regarding the benefits of the rule and ignored relevant information and record evidence contradicting these contentions, and that some of ED’s assertion are negated by the experience of state AGs who have helped tens of thousands of student borrowers through these processes.
  • The brief also argues that the rule makes it all but impossible for student borrowers to obtain relief rescinding key borrower protections and eliminating most of the grounds on which such relief could be sought, and that it contradicts longstanding agency practice because it does not provide a clear, fair, and transparent process for students seeking relief.