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Amicus Brief on Borrower Defense Rule

In July 2020, we filed a brief in the U.S. District Court for the Southern District of New York supporting a challenge to the Department of Education’s replacement for a 2016 regulation known as the Borrower Defense Rule. The replacement rule makes it much harder for student borrowers who have been defrauded by for-profit colleges to get their loans discharged—and for the government to recover the value of those discharged loans from the offending institutions.

Our brief focuses on serious flaws in the Department’s economic analysis of the new policy. Most notably, the Department fails to consider the costs of forgone debt relief for borrowers and refuses to acknowledge that reducing financial accountability for institutions will encourage them to engage in more fraud. We later filed a brief in the Second Circuit Court of Appeals after SDNY upheld the rule.

We previously filed briefs in the U.S. District Court for the District of Columbia supporting challenges to the Department’s repeated attempts to delay implementation of the 2016 rule.  All of those delays were deemed unlawful and vacated.