Oregon AG joins 22 AGs on student loan case

By Oregon Attorney General,
Press Release

Urges the Fifth Circuit to uphold the U.S. Department of Education’s student loan discharge authority and other protections for borrowers harmed by predatory institutions.

Attorney General Ellen Rosenblum has 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 amicus brief urges the court to uphold the U.S. Department of Education (USDOE)’s “Borrower Defense Rule.” Under the Rule, student loan borrowers who can show that the school they attended engaged in certain wrongful acts or omissions have a defense against repayment of their federal student loan debt through a process known as “borrower defense” to repayment.

“The ‘borrower defense to repayment rule’ is extremely important for student loan borrowers who have been defrauded by profit-driven schools. Too many for-profit colleges and universities have misled and deceived our vulnerable students, persuading—sometimes coercing— them to take out loans to attend programs that provided them minimal educational value,” said Attorney General Rosenblum.

In April 2023, Career Colleges and Schools of Texas (CCST) filed a lawsuit challenging the rule and moved for a preliminary injunction against its implementation. The federal trial court initially denied the motion, but later granted it, pending CCST’s appeal.

The amicus brief describes how states like Oregon regularly investigate and take enforcement action against predatory postsecondary institutions to redress widespread and systemic unfair and deceptive practices.

“CCST’s efforts to eliminate such critical protections for defrauded borrowers could have disastrous impacts on students in Oregon. We joined this brief to help ensure that won’t happen!” continued Rosenblum.

The Oregon Department of Justice has helped thousands of student borrowers secure meaningful relief under prior versions of the Rule.

In April of 2021, the Oregon Attorney General, together with a bipartisan group of 25 state AGs, filed an application with the USDOE asking for the cancellation of federal student loan debt for thousands of former students, including an unspecified number of Oregonians, who attended ITT Technical Institute. The now defunct for-profit school defrauded thousands of students by encouraging them to enroll and take out loans based on misleading information about the value of an ITT degree and empty promises of high-paying jobs after graduation.

In August of 2022, the USDOE responded by forgiving or refunding $3.9 billion in federal student loan debt for 208,000 former students of ITT Technical Institute. In Oregon, that meant 2,090 Oregonians who borrowed to enroll at an ITT school between 2005 and 2016 had $39.9 million in student debt cancelled.

A copy of the full multistate amicus brief, led by the Massachusetts AG, may be found here. Oregon is also joined by California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin in filing this brief.

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