Judge Advances Pared-Down Lawsuits Over DeVos’ Repeal of Obama-Era Rule

Education Secretary Betsy DeVos participates in a roundtable event at Waukesha STEM Academy on June 23, 2020, in Waukesha. (AP Photo/Morry Gash)

SAN JOSE, Calif. (CN) — Education Secretary Betsy DeVos cannot dodge two lawsuits challenging the repeal of an Obama-era rule designed to protect students from taking on debt for worthless education programs, but the secretary defeated most claims asserted in them.

In July 2019, DeVos repealed the “Gainful Employment Rule,” which required schools to certify their programs adequately prepared students for decent-paying jobs after graduation. Proposed in 2014 and enacted one year later, the rule was intended to safeguard students from deceptive marketing by predatory, for-profit schools and inform them if a particular program offered a reasonable return on investment.

The rule also limited which schools can accept federal student loans by requiring the Education Department to determine eligibility based on the average debt-to-earnings ratio for graduates of each program.

DeVos nixed the rule, arguing the repeal would eliminate onerous reporting requirements for colleges and allow students to retain “the right to enroll in the program of their choice, rather than allowing government to decide which programs are worth a student’s time and financial investment.”

The American Federation of Teachers, California Federation of Teachers and two individual teachers pursuing higher education sued DeVos in January. They claimed DeVos ignored important evidence, including estimates that the repeal will result in more students having difficulty repaying loans, leading to defaults and costing taxpayers $5.3 billion over 10 years.

California followed with its own federal lawsuit against the repeal rule in March.

In a 24-page ruling Thursday, U.S. District Judge Edward Davila, a Barack Obama appointee, tossed nearly all claims asserted in both lawsuits, finding the court could not address the plaintiffs’ grievances by reinstating the Obama-era rule.

However, Davila advanced one claim over alleged defects in the process used to repeal the rule. The plaintiffs claimed the Education Department failed to specify the research and an analysis it relied upon to make its decision. Failure to provide that information robbed the plaintiffs of a meaningful chance to comment on the proposed rule before it was finalized, Davila concluded.

The judge dismissed all other claims asserted in the lawsuits, including complaints that students would be “deprived of information” on the value of educational programs. The 2014 rule gave the Education Secretary the power to make schools disclose what types of jobs each program would prepare students for, graduation rates and other information.

Davila found the Obama-era rule gave the Education Secretary the unfettered authority to decide what data should be collected from and disclosed by schools.

“Thus, the type of information collected is within the Secretary’s discretion,” Davila wrote.

Davila said he cannot direct the Education Secretary to exercise her discretion in a particular way because that would violate the separation-of-powers principle enshrined in the U.S. Constitution.

“Because the Court cannot order the Secretary to provide specific information, the Court cannot remedy the harm caused by the deprivation of information,” Davila concluded.

The judge also dismissed claims related to the prior rule’s requirement that the Education Department determine if schools are eligible to accept federal student loans based on whether they are preparing students for gainful employment after graduation.

To make those determinations, the Education Department was relying on income data from the Social Security Administration to calculate a debt-to-earnings ratio for graduates from each program.

The Social Security Administration stopped sharing that data with the Education Department in 2018 after another federal judge ruled in a separate lawsuit that the sharing of earnings data violated the Privacy Act. 

Davila found that even if he revived the Obama-era rule, the department could not make eligibility determinations based on the prior system because the Social Security Administration no longer shares that information.

“Reinstatement of the 2014 [Gainful Employment] Rule would not result in new debt-to-earnings rate calculations,” Davila wrote. “Without these calculations, plaintiffs would not gain any new information about GE Program’s eligibility.”

Davila dismissed all claims, other than the procedural claim asserted in each lawsuit, without leave to amend.

Despite getting most claims dismissed, an attorney with the National Student Legal Defense Network, which represents the teachers’ unions, hailed the decision as a giant step forward in the legal fight against Devos’ repeal rule.

“The Court’s decision allows us to move forward and prove that Secretary DeVos repealed the Gainful Employment rule illegally and without justification,” said Student Defense Vice President and Chief Counsel Dan Zibel. “We are going to restore these protections for our clients and for the millions of students who enroll in for-profit and career college programs every year.

The Education Department and California Attorney General’s Office did not immediately return emails seeking comment Thursday evening.

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