State AGs filed amicus brief in support of federal student loan borrowers

State Issues State Attorney General Department of Education Courts Student Lending

On July 29, a coalition of attorneys general from 20 states and the District of Columbia filed an amicus brief in the U.S. Court of Appeals for the Second Circuit against Secretary of Education Miguel Cardona and the Department of Education in support of an appeal challenging the Department’s 2019 rule governing student loan relief for defrauded borrowers (“2019 Rule”). As summarized in the brief, Congress created a statutory entitlement to loan relief for borrowers who are defrauded by their school—a process known as “borrower defense”—to “ensure that victimized students are not unfairly saddled with federal student loans.” The amici brief argues that the 2019 Rule “reject[ed] longstanding agency practice and positions going back 25 years to the first borrower defense rule” and “makes it all but impossible for defrauded borrowers to successfully obtain loan relief.”  The states argue that the Department’s 2019 Rule is thus arbitrary and capricious under the Administrative Procedure Act and request that the Second Circuit reverse the district court’s holding to the contrary.

As previously covered by InfoBytes, in July 2020, state attorneys general from 22 states and the District of Columbia filed a complaint in U.S. District Court for the Northern District of California against Secretary of Education Betsy DeVos and the Department of Education, also asking the court to vacate the Department’s 2019 final rule.