Attorney General Brown Joins Amicus Brief Supporting Stronger Relief Options for Borrowers Harmed by Predatory Institutions

Per the Maryland Attorney General’s Office: “Maryland Attorney General Anthony G. Brown joined a coalition of 23 Attorneys General in filing an amicus brief with the U.S. Court of Appeals for the Fifth Circuit in the case Career Colleges and Schools of Texas v. U.S. Department of Education, et al. The brief urges the court to uphold the Department of Education’s Borrower Defense Rule (Rule), which provides relief for student loan borrowers who experience fraud and abuse by educational institutions.

The brief was filed in support of the Department of Education in a lawsuit brought in February 2023 by the Career Colleges and Schools of Texas (CCST), an organization representing forprofit colleges and trade schools, which seeks to challenge the Department’s Borrower Defense Rule. The Rule, amongst other protections, allows borrowers who experienced certain misconduct on the part of their schools to receive debt forgiveness on their federal student  loans.

“The Borrower Defense Rule is one of the best protections we have for students who were deceived or defrauded by for-profit schools, so they are not unfairly saddled with federal student loan debt,” said Attorney General Brown. “Weakening those protections would make it harder for these students to obtain debt relief.”

In April 2023, CCST filed a motion for a preliminary injunction against the student borrower protections. The motion was initially denied by the federal trial court but then granted by the Fifth Circuit in July 2023, allowing CCST to temporarily evade compliance with the Department’s borrower defense protections. CCST’s appeal from the trial court’s denial of a
preliminary injunction is set to be heard in November 2023.

The coalition’s brief describes how states regularly investigate and take enforcement action against predatory postsecondary institutions through their consumer protection offices to redress widespread and systemic unfair and deceptive practices, primarily by private, for-profit institutions. CCST’s lawsuit seeks to eliminate such critical protections.

The Rule has been lawfully implemented by the Department, the brief argues, in accordance with the federal Higher Education Act. In cases where state investigations have revealed wrongdoing by predatory institutions, the Rule augments the other remedies available through state enforcement actions by providing borrowers with the possibility of discharging their federal student loans that were based upon institutions’ fraudulent misconduct – thereby not only granting meaningful relief to borrowers, but also deterring future institutional misconduct. In the brief, the coalition, also rebuts CCST’s claim that, in order to be eligible for borrower defense relief based on their schools’ misconduct, borrowers must first go into default, with all the grievous harms default entails for borrowers, their families, and their communities. Rather,
the coalition argues, the Department has the legal authority to grant student loan discharge through the Rule for borrowers, regardless of whether the loans are in default.

In accordance with the states’ experience investigating widespread and systemic misconduct and wrongdoing by predatory institutions – often impacting large cohorts of borrowers – the amici states further argue in support of the Rule’s group application process. This process enables the states to file discharge claims on behalf of groups of affected borrowers instead of on a studentby-student basis. Not only does the Rule’s group discharge process better ensure that larger numbers of harmed borrowers are able to access relief, but also acts as a more cost-effective method of recourse than adjudicating individual claims.

In submitting the brief, Attorney General Brown joins the Attorneys General of California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin.