UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · Case 3:19-cv-03674-WHA Document 56-3 Filed 11/14/19 Page 332 of 342Case 1:20-cv-01414-LGS Document 40-1 Filed 06/29/20

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

NEW YORK LEGAL ASSISTANCE

GROUP,

Plaintiff,

v.

ELISABETH DeVOS, in her official capacity

as Secretary of Education, and UNITED

STATES DEPARTMENT OF EDUCATION,

Defendants.

No. 20 Civ. 1414 (LGS)

PLAINTIFF’S NOTICE OF MOTION FOR SUMMARY JUDGMENT

PLEASE TAKE NOTICE that, upon the accompanying: (1) Memorandum of Law in

Support of Plaintiff’s Motion for Summary Judgment; (2) Declaration of Adam R. Pulver, dated

June 29, 2020, and the exhibits attached thereto; (3) Declaration of Eileen Connor, dated June 29,

2020, and the exhibits attached thereto; (4) Declaration of Jane Greengold Stevens, dated June 23,

2020; (5) Preliminary Joint Statement of Facts; and upon all prior proceedings, pleadings, and

filings in this Action, Plaintiff New York Legal Assistance Group will move this court at the

Thurgood Marshall United States Courthouse, 40 Foley Square, New York, New York, on such

date and at such time as the Court may direct, for an Order granting Plaintiff summary judgment,

pursuant to Rule 56 of the Federal Rules of Civil Procedure, and, pursuant to 5 U.S.C. § 706(2),

holding unlawful and setting aside the Rule issued by Defendants on September 23, 2019, titled

“Student Assistance General Provisions, Federal Family Education Loan Program, and William

D. Ford Federal Direct Loan Program,” and for such other relief that the Court may deem just and

proper.

Case 1:20-cv-01414-LGS Document 38 Filed 06/29/20 Page 1 of 2

In accordance with the schedule contained in the Court’s June 17, 2020 Order, Defendants

shall file their opposition and cross-motion for summary judgment by July 29, 2020; Plaintiff shall

file its reply in support of its motion and opposition to Defendants’ cross-motion by August 21,

2020; and Defendants shall file their reply and the administrative record by September 4, 2020.

Dated: June 29, 2020 Respectfully submitted,

/s/ Adam R. Pulver

Eileen M. Connor Adam R. Pulver

Toby R. Merrill Adina H. Rosenbaum (pro hac vice)

Michael N. Turi PUBLIC CITIZEN LITIGATION GROUP

PROJECT ON PREDATORY STUDENT LENDING, 1600 20th Street NW

LEGAL SERVICES CENTER OF HARVARD LAW SCHOOL Washington, DC 20009

122 Boylston Street (202) 588-7790

Jamaica Plain, MA 02130 [email protected]

(617) 522-3003

[email protected]

Counsel for Plaintiff





GROUP,

Plaintiff,

v.




Defendants.

No. 20 Civ. 1414 (LGS)

MEMORANDUM OF LAW IN SUPPORT OF

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT


Toby R. Merrill Adina H. Rosenbaum






(617) 522-3003

[email protected]



i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................................................................................... iii

INTRODUCTION ...........................................................................................................................1

BACKGROUND .............................................................................................................................3

I. Statutory and Regulatory Background ...........................................................................3

II. The 2016 Rule ................................................................................................................5

III. The Rulemaking at Issue ................................................................................................7

A. The 2017–18 Negotiated Rulemaking .....................................................................7

B. The Proposed Rule ...................................................................................................8

C. The Final Rule..........................................................................................................9

IV. Plaintiff NYLAG ...........................................................................................................9

LEGAL STANDARD ....................................................................................................................10

ARGUMENT .................................................................................................................................10

I. Plaintiff Has Standing to Challenge the 2019 Rule. ....................................................10

II. ED Failed to Comply with Required Procedure. .........................................................12

A. ED failed to engage in meaningful public consultation and negotiated rulemaking

before issuing the 2018 NPRM. .............................................................................13

B. ED was required to reinitiate, or at least reopen, the rulemaking after the 2016

Rule went into effect. .............................................................................................14

C. The three-year limitations period for “defensive” claims was not a logical out-

growth of the proposed rule. ..................................................................................16

III. The 2019 Rule is Arbitrary and Capricious. ................................................................17

A. Changes to the claims process and standard for relief were arbitrary and capri-

cious. ......................................................................................................................19

1. Three-year limitations period on “defensive” claims ......................................20

2. The new standard for relief ..............................................................................22

3. Elimination of the group claims process ..........................................................25

4. Amount of relief ...............................................................................................27


ii

B. The rescission of conditions on the use of pre-dispute arbitration agreements and

class action waivers was arbitrary and capricious. ................................................27

C. ED’s elimination of disclosure requirements was arbitrary and capricious. .........30

D. ED’s elimination of automatic closed school discharges was arbitrary and capri-

cious. ......................................................................................................................32

CONCLUSION ..............................................................................................................................34


iii

TABLE OF AUTHORITIES1

CASES PAGE(S)

Allina Health Services v. Sebelius,

746 F.3d 1102 (D.C. Cir. 2014) .........................................................................................17

American Iron & Steel Institute v. EPA,

115 F.3d 979 (D.C. Cir. 1997) ...........................................................................................14

American Water Works Ass’n v. EPA,

40 F.3d 1266 (D.C. Cir. 1994) ...........................................................................................14

American Wild Horse Preservation Campaign v. Perdue,

873 F.3d 914 (D.C. Cir. 2017) ...........................................................................................21

Animal Legal Defense Fund v. Perdue,

872 F.3d 602 (D.C. Cir. 2017) ...........................................................................................20

Batalla Vidal v. Duke,

No. 16-CV-47561(NGG), 2017 WL 4480198 (E.D.N.Y. Oct. 3, 2017) ...........................8

Bauer v. DeVos,

325 F. Supp. 3d 74 (D.D.C. 2018) .............................................................................2, 7, 15

Bull v. United States,

295 U.S. 247 (1935) ...........................................................................................................21

Catawba County v. EPA,

571 F.3d 20 (D.C. Cir. 2009) .............................................................................................14

Centro de la Comunidad Hispana de Locust Valley v. Town of Oyster Bay,

868 F.3d 104 (2d Cir. 2017)...............................................................................................11

County of Westchester v. U.S. Department of Housing & Urban Development,

116 F. Supp. 3d 251 (S.D.N.Y. 2015)................................................................................10

Community Nutrition Institute v. Block,

749 F.2d 50 (D.C. Cir. 1984) .............................................................................................15

Consumer Energy Council of America v. Federal Energy Regulatory Commission,

673 F.3d 425 (D.C. Cir. 1982) ...........................................................................................13

1 Comments cited are not included herein, but will be provided to the Court in a Joint Appendix,

along with an index, per the Court’s June 23, 2020 Order (ECF 33).


iv

Department of Homeland Security v. Regents of the University of California,

No. 18-587, 2020 WL 3271746 (U.S. June 18, 2020) .......................................................31

FCC v. Fox Television Stations, Inc.,

556 U.S. 502 (2008) ...........................................................................................................18

Encino Motorcars, LLC v. Navarro,

136 S. Ct. 2117 (2016) .................................................................................................18, 20

Hadwan v. U.S. Department of State,

340 F. Supp. 3d 351 (S.D.N.Y. 2018)..................................................................................3

Havens Realty Corp. v. Coleman,

455 U.S. 363 (1982) ...........................................................................................................11

Hill Dermaceuticals, Inc. v. FDA,

709 F.3d 44 (D.C. Cir. 2013) ...............................................................................................8

Idaho Farm Bureau Federation v. Babbitt,

58 F.3d 1392 (9th Cir. 1995) .............................................................................................15

Long Island Care at Home, Ltd. v. Coke,

551 U.S. 158 (2007) ...........................................................................................................16

Make the Road New York v. Cuccinelli,

419 F. Supp. 3d 661 (S.D.N.Y. 2019)..........................................................................12, 18

Motor Vehicle Manufacturers Association of the U.S., Inc. v. State Farm Mutual Automo-

bile Insurance Co.,

463 U.S. 29 (1983) .......................................................................................................18, 22

National Ass’n of Psychiatric Health Systems v. Shalala,

120 F. Supp. 2d 33 (D.D.C. 2000) .....................................................................................17

National Black Media Coalition v. FCC,

791 F.2d 1016 (2d Cir. 1986).............................................................................................16

National Education Ass’n v. DeVos,

379 F. Supp. 3d 1001 (N.D. Cal. 2019). ............................................................................13

New Jersey v. EPA,

626 F.2d 1038 (D.C. Cir. 1980) .........................................................................................13

New York v. U.S. Department of Health & Human Services,

414 F. Supp. 3d 475 (S.D.N.Y. 2019)....................................................................17, 20, 31


v

New York Civil Liberties Union v. New York City Transit Authority,

684 F.3d 286 (2d Cir. 2012).........................................................................................10, 11

NRDC v. U.S. Department of Energy,

362 F. Supp. 3d 126 (S.D.N.Y. 2019)................................................................................18

NRDC v. U.S. EPA,

279 F.3d 1180 (9th Cir. 2002) ..........................................................................................14

NRDC v. U.S. EPA,

676 F. Supp. 2d 307 (S.D.N.Y. 2009) ...............................................................................13

Nnebe v. Daus,

644 F.3d 147 (2d Cir. 2011)...............................................................................................12

Olsen v. Stark Homes, Inc.,

759 F.3d 140 (2d Cir. 2014)...............................................................................................12

Pen American Center, Inc. v. Trump,

No. 18 Civ. 9433 (LGS), 2020 WL 1434573 (S.D.N.Y. Mar. 24, 2020) ..........................10

Pharmaceutical Research & Manufacturers of America v. FTC,

44 F. Supp. 3d 95 (D.D.C. 2014) .......................................................................................15

Portland Cement Ass’n v. EPA,

665 F.3d 177 (D.C. Cir. 2011) ...........................................................................................14

Rural Cellular Ass’n v. FCC,

588 F.3d 1095 (D.C. Cir. 2009) .........................................................................................13

Solite Corp. v. U.S. EPA,

952 F.2d 473 (D.C. Cir. 1991) ...........................................................................................15

Time Warner Cable Inc. v. FCC,

729 F.3d 137 (2d Cir. 2013)...............................................................................................16

USA Group Loan Service, Inc. v. Riley,

82 F.3d 708 (7th Cir. 1996) ...............................................................................................13

Vara v. DeVos,

No. 19-cv-12175-LTS, 2020 WL 3489679 (D. Mass. June 25, 2020) ..............................11

Williams v. Pierce,

708 F.2d 57 (2d Cir. 1983).................................................................................................16


vi

Yale New Haven Hospital v. Azar,

No. 3:18-CV-1230 (JCH), 2020 WL 2204197 (D. Conn. May 6, 2020) ...........................17

Yale-New Haven Hospital v. Leavitt,

470 F.3d 71 (2d Cir. 2006).................................................................................................18

STATUTES

5 U.S.C. § 553 ............................................................................................................................2, 12

5 U.S.C. §706(2)(A).......................................................................................................................10

5 U.S.C. §706(2)(D).......................................................................................................................10

20 U.S.C. § 1070 ..............................................................................................................................3

20 U.S.C. § 1087 ..............................................................................................................................3

20 U.S.C. § 1087(c)(1) .................................................................................................................1, 4

20 U.S.C. § 1087(c)(2) .....................................................................................................................1

20 U.S.C. § 1087e(h) .......................................................................................................................3

20 U.S.C. § 1087e(m) ......................................................................................................................3

20 U.S.C. § 1087j .............................................................................................................................3

20 U.S.C. § 1094 ..............................................................................................................................3

20 U.S.C. § 1098a ......................................................................................................................4, 12

20 U.S.C. § 1098a(a)(1) ...................................................................................................................4

20 U.S.C. § 1098a(a)(2) ...................................................................................................................4

20 U.S.C. § 1098a(b) ...................................................................................................................2, 4

CARES Act, H.R. 78, 116th Cong. § 3513 ...................................................................................22

REGULATIONS

34 C.F.R. § 668.14(a).......................................................................................................................3

34 C.F.R. § 668.14(b) ......................................................................................................................3


vii

34 C.F.R. § 668.14(b)(32) ..........................................................................................................6, 33

34 C.F.R. § 668.171 .........................................................................................................................5

34 C.F.R. § 668.41(h) ................................................................................................................6, 31

34 C.F.R. § 668.41(i) .................................................................................................................6, 31

34 C.F.R. § 668.51(i) .....................................................................................................................27

34 C.F.R. § 668.71(c).................................................................................................................5, 22

34 C.F.R. § 682.200(b) ..................................................................................................................22

34 C.F.R. § 685.206(e).............................................................................................9, 17, 20, 23, 27

34 C.F.R. § 685.207(b) ..................................................................................................................22

34 C.F.R. § 685.207(b)(2)(ii) .........................................................................................................22

34 C.F.R. § 685.207(c)...................................................................................................................21

34 C.F.R. § 685.214(c)(2)(ii) .....................................................................................................6, 32

34 C.F.R. § 685.222 .........................................................................................................................5

34 C.F.R. § 685.222(b) ....................................................................................................................5

34 C.F.R. § 685.222(c)...............................................................................................................5, 16

34 C.F.R. § 685.222(d) ..............................................................................................................5, 16

34 C.F.R. § 685.222(d)(7) ................................................................................................................5

34 C.F.R. § 685.222(f) ...............................................................................................................5, 25

34 C.F.R. § 685.222(g) ..................................................................................................................25

34 C.F.R. § 685.222(h) ..................................................................................................................25

34 C.F.R. § 685.222(i)(2)...............................................................................................................27

34 C.F.R. § 685.300(e)...............................................................................................................6, 27

34 C.F.R. § 685.300(f) ...............................................................................................................6, 27


viii

34 C.F.R. § 685.304 .......................................................................................................................27

OTHER AGENCY MATERIALS

ED, Final regulations; Student Assistance General Provisions, Federal Perkins Loan Pro-

gram, Federal Family Education Loan Program, William D. Ford Federal Direct

Loan Program, and Teacher Education Assistance for College and Higher Educa-

tion Grant Program, 81 Fed. Reg. 75,926, AR-K-1 (Nov. 1, 2016) .......................... passim

ED, Final regulations; Student Assistance General Provisions, Federal Perkins Loan Pro-

gram, Federal Family Education Loan Program, William D. Ford Federal Direct

Loan Program, and Teacher Education Assistance for College and Higher Educa-

tion Grant Program, 83 Fed. Reg. 6458, AR-K-175 (Feb. 14, 2018) ..................................7

ED, Final rule, notification of partial delay of effective dates; Student Assistance General

Provisions, Federal Perkins Loan Program, Federal Family Education Loan Pro-

gram, William D. Ford Federal Direct Loan Program, and Teacher Education As-

sistance for College and Higher Education Grant Program, 82 Fed. Reg. 27,621,

AR-K-165 (Jun. 16, 2017) ...................................................................................................6

ED, Interim final rule; delay of effective date; request for comments; Student Assistance

General Provisions, Federal Perkins Loan Program, Federal Family Education

Loan Program, William D. Ford Federal Direct Loan Program, and Teacher Edu-

cation Assistance for College and Higher Education Grant Program, 82 Fed. Reg.

49,114, AR-K-167 (Oct. 24, 2017) ......................................................................................7

ED, Notice of intent to establish negotiated rulemaking committees; Negotiated Rule-

making Committee; Public Hearings, 82 Fed. Reg. 27,640, AR-C-1 (June 16,

2017) ....................................................................................................................................7

ED, Notice of proposed rulemaking; Student Assistance General Provisions, Federal Per-

kins Loan Program, Federal Family Education Loan Program, and William D.

Ford Federal Direct Loan Program, 83 Fed. Reg. 37,242, AR-B-1 (July 31, 2018) . passim

MISCELLANEOUS

American Bar Ass’n, Section of Dispute Resolution, “Section Membership” ..............................28

American Bar Ass’n, Section of Dispute Resolution, “Benefits of Arbitration for Com-

mercial Disputes,” AR-G-3358 ................................................................................................28

James R. Copland, et al., Class Actions and Mass Torts, Trial Lawyers, Inc. 2016, Man-

hattan Institute (2016), AR-G-730 ...........................................................................................29


INTRODUCTION

In 2016, defendant U.S. Department of Education (ED) issued a final rule that aimed “to

protect student loan borrowers from misleading, deceitful, and predatory practices of, and failures

to fulfill contractual promises by, institutions participating in [ED’s] student aid programs.” AR-

K-1 (2016 Rule).2 Two of the ways the 2016 Rule did so were: (1) by altering the processes by

which students could obtain relief from federal student loan debt pursuant to the Higher Education

Act’s (HEA) “borrower defense” and “closed school discharge” provisions, 20 U.S.C. §

1087(c)(1), and (2) via new regulatory requirements for participating institutions including man-

datory disclosure requirements and conditions on the use of forced arbitration clauses and class

action waivers. See Joint Statement of Facts (JSOF) ¶¶ 23–26.3

The 2016 Rule was explicitly premised on the notion that the pre-existing regime did not work,

given widespread revelations of fraudulent conduct by schools, particularly in the for-profit sector.

Once the scope of this conduct was revealed, many schools suddenly closed. Even where they did

not, students were saddled with tens of thousands of dollars in student loan debt incurred in ex-

change for coursework of little or no value. The 2016 Rule recognized that ED’s existing loan

discharge process was insufficiently “accessible” to students and did not sufficiently allow ED “to

hold schools accountable for actions and omissions that result in loan discharges.” AR-K-1. It also

recognized that the problems in the industry, and the resulting harm to student borrowers and tax-

payers, could not be solved by shifting the onus to students to become wiser consumers, and that

2 All citations to AR-X-### are to the Certified Administrative Record, to be filed with the court

at the completion of briefing, per the Court’s June 11, 2020 Order. ECF 29.

3 In accordance with the Court’s June 17, 2020 Order, ECF 31, Plaintiff incorporates the concur-

rently filed Joint Statement of Facts by reference.


2

holding students to higher burdens in navigating the borrower defense process, given “information

asymmetry between borrowers and institutions,” would be inappropriate. AR-K-12.

Nonetheless, in 2017, before the 2016 Rule went into effect, ED set out to repeal it. First, ED

made three unlawful attempts to delay the rule, all of which were invalidated by a district court.

See Bauer v. DeVos, 325 F. Supp. 3d 74 (D.D.C. 2018) (Bauer I). Then, while the lawfulness of

those delays was being litigated, ED convened a negotiated rulemaking committee, as was required

by the HEA. 20 U.S.C. §1098a(b). In the resulting negotiated rulemaking sessions, ED improperly

treated the repeal of the 2016 Rule as a fait accompli—not even allowing discussion as to the

reasoning behind ED’s change in position. In 2018, after the negotiated rulemaking failed to reach

consensus, ED issued a notice of proposed rulemaking (NPRM) that presumed the 2016 Rule

would never go into effect. See AR-B-67. Later that year, following the Bauer decision, the 2016

Rule went into effect. Nonetheless, in 2019, ED relied on its earlier, stale rulemaking record, which

had incorrectly assumed the 2016 Rule would never go into effect, to issue a new rule that essen-

tially eliminates all “institutional accountability,” shifts blame to defrauded students, and creates

Herculean standards for borrower defense relief.

The 2019 Rule is procedurally flawed because ED failed to engage in meaningful negotiated

rulemaking as required by the HEA, and failed to provide a meaningful opportunity to comment

as required by the Administrative Procedure Act (APA), 5 U.S.C. § 553. It is also substantively

flawed because ED failed to engage in the reasoned analysis required to support rescission of the

2016 Rule. Throughout the Rule, ED repeatedly failed to acknowledge contrary facts and conclu-

sions it relied upon in the 2016 Rule, much less explain its divergence from its 2016 position. ED

also repeatedly ignored the benefits associated with the 2016 Rule, and the harms its proposal

would cause to student borrowers and taxpayers; this failure to consider important relevant factors


3

was arbitrary and capricious. The explanations that ED did give for rescinding the 2016 Rule were

not supported by the record; ED relied on invented problems, including “frivolous” claims and

mischievous unidentified third-parties, despite no evidence that these problems existed or that

ED’s policy changes would do anything to combat these issues even if they did exist.

Because the 2019 Rule is procedurally flawed and arbitrary and capricious, the Court should

set aside the 2019 Rule in its entirety.

BACKGROUND

I. Statutory and Regulatory Background4

ED distributes more than $120 billion a year in postsecondary student aid via Title IV of the

HEA, 20 U.S.C. § 1070 et seq—the majority through the Federal Direct Loan Program. AR-G-

1693 at 1704, 1722. To receive these funds, schools sign “Program Participation Agreements”

(PPAs), via which they agree to comply with the HEA, its implementing regulations, and applica-

ble state laws. 20 U.S.C. § 1094; 34 C.F.R. § 668.14(a)-(b).

Title IV identifies situations in which Congress determined borrowers should not be liable for

student loan debt. See, e.g., 20 U.S.C. § 1087, 1087e(h), 1087e(m), 1087j. The statute requires ED

to “specify in regulations which acts or omissions of an institution of higher education a borrower

may assert as a defense to repayment of” Direct Loans (the “borrower defense” provision). 20

U.S.C. § 1087e(h). It also requires ED to discharge a borrower’s liability on loans when a student

is “unable to complete the program in which such student is enrolled due to the closure of the

institution” (“closed school” discharges) and when a student’s eligibility for Title IV loans “was

falsely certified by the eligible institution or was falsely certified as a result of a crime of identity

4 Cited materials not in the administrative record may be considered as relevant background infor-

mation. See Hadwan v. U.S. Dep’t of State, 340 F. Supp. 3d 351, 355 (S.D.N.Y. 2018).


4

theft” (“false certification” discharges). 20 U.S.C. § 1087(c)(1).

Congress mandated an unusual amount of public involvement in ED’s implementation of these

and other Title IV provisions, beyond that required by the APA. First, ED is required to “obtain

public involvement in the development of proposed regulations,” “provid[ing] for a comprehen-

sive discussion and exchange of information concerning the implementation [of Title IV].” 20

U.S.C. § 1098a(a)(1)–(2). ED is required to “take into account the information received through

such mechanisms in the development of proposed regulations.” Id. §1098a(a)(2). ED is then re-

quired to “prepare draft regulations” and “submit such regulations to a negotiated rulemaking pro-

cess.” Id. § 1098a(b)(1). After a negotiated rulemaking, ED must publish any proposed rule on

which negotiators reach consensus, or a proposed rule of ED’s choosing if negotiators do not reach

consensus, in the Federal Register for public comment. See AR-G-1974.

In 1994, ED promulgated regulations for the assertion of “borrower defenses,” which provided

that borrowers had a defense to repayment where they demonstrated that a school’s acts or omis-

sions “would give rise to a cause of action under applicable State law,” but were silent on the

process a borrower follows to assert a borrower defense claim. JSOF ¶ 4. Although initially in-

tended to serve as a placeholder, these regulations remained in place for two decades. JSOF ¶ 18.

The 1994 regulations were rarely used until 2015, when state and federal investigations revealed

that Corinthian Colleges, a group of for-profit schools, had misrepresented their job placement

rates to students, eventually leading to the schools’ bankruptcy. JSOF ¶ 19. Corinthian’s collapse

alone led to thousands of borrower defense claims being filed with ED. JSOF ¶ 20. The Corinthian

claims, and “the growth of the proprietary higher education sector” more generally, highlighted

“difficulties in application and interpretation of the current State law standard, as well as the lack


5

of clarity surrounding the procedures that apply for borrower defense,” leading ED to begin the

process of amending its regulations in 2015. JSOF ¶ 6.

II. The 2016 Rule

The resulting rule was published on November 1, 2016, effective July 1, 2017. 2016 Rule, AR-

K-1. The 2016 Rule included several provisions designed to increase institutional accountability

and protect students and the public fisc, some of which directly regulated the relationship between

schools and ED. See, e.g., id. at AR-K-53–89. For example, the rule required schools to provide

letters of credit upon “triggering” one of specified events that signified financial instability, 34

C.F.R. § 668.171 (2016), and regulated the process by which ED would attempt to recoup funds

from schools where it had approved a borrower defense claim, 34 C.F.R. § 685.222(d)(7) (2016).

The rule also included provisions regulating the relationship between students and schools, and

between students and ED. See, e.g., AR-K-89–116. Among these provisions, the rule made it easier

for borrowers to assert a borrower defense, both substantively and procedurally. See generally 34

C.F.R. § 685.222 (2016).The rule provided that borrowers had a defense to repayment if they were

party to a judgment against a school based on violations of state or federal law, a school had

breached its contractual obligations, or a school had “made a substantial misrepresentation … that

the borrower reasonably relied on to the borrower’s detriment when the borrower decided to attend,

or to continue attending, the school or decided to take out a direct loan.” 34 C.F.R. § 685.222(b)–

(d) (2016); see also id. § 668.71(c) (2016) (defining “misrepresentation”). ED established a six-

year statute of limitations for students seeking to recoup amounts already paid on student loans,

but provided that, as to amounts still owed, a borrower could assert a defense to repayment at any

time. Id. § 685.222(d) (2016). The rule also provided ED could adjudicate claims on a group-wide

basis when it deemed it appropriate, even absent an application. Id. § 685.222(f) (2016).


6

Second, the 2016 Rule updated the procedures for obtaining false certification and closed

school discharges. Closing schools were required to provide borrowers with information about

closed school discharges. 34 C.F.R. § 668.14(b)(32) (2016). Students who did not re-enroll in a

Title IV-participating institution within three years of their school’s closure would be granted “au-

tomatic” discharges, without needing to file an application. 34 C.F.R. § 685.214(c)(2)(ii) (2016).

Third, ED added new provisions to PPAs related to the resolution of disputes between students

and schools. As a condition of receiving Title IV funds, schools were required to agree not to rely

on predispute agreements that barred students from bringing class actions based on conduct that

would also give rise to a borrower defense claim. 34 C.F.R. § 685.300(e) (2016). Schools were

also required to agree not to enter into mandatory predispute arbitration agreements with students,

or rely on such agreements, as to claims based on that conduct. Id. § 685.300(f) (2016).

Finally, the 2016 Rule required for-profit institutions to make a variety of disclosures to stu-

dents and potential students. One provision required for-profit institutions to provide a notice in

their promotional materials if the median borrower had failed to pay off or reduce their loan bal-

ance by at least one dollar, as calculated by ED. 34 C.F.R. § 668.41(h) (2016). Another required

for-profit institutions provide disclosures if the institution experienced one of the events that “trig-

gered” the financial protection requirement. 34 C.F.R. § 668.41(i) (2016).

Two weeks before the 2016 Rule was scheduled to go into effect, ED issued a notice staying

the effective date for many of the 2016 Rule’s provisions “pending judicial review,” citing litiga-

tion brought by an association of for-profit colleges, purportedly pursuant to 5 U.S.C. § 705. See

AR-K-165 (the Section 705 Stay). In that notice, ED also indicated that it intended to “review and

revise” the 2016 Rule. Id. at AR-K-166.


7

Student borrowers challenged the Section 705 stay under the APA. See Bauer v. DeVos, No.

17-1330, AR-G-22 (D.D.C. filed July 6, 2017). While the Bauer action was pending, ED issued

two further delay rules. See AR-K-167, AR-K-175. These new delays were challenged in Bauer.

On September 12, 2018, the court held all of ED’s delays were unlawful. Bauer I, 325 F. Supp. 3d

74. In so doing, it found ED failed to consider at all “how the public interest or the interest of

student borrowers would be affected by its decision,” id. at 108, and that ED’s stated concern with

compliance costs and “serious questions” as to the lawfulness of the 2016 Rule, particularly the

arbitration and class action waiver provisions, represented “an unacknowledged and unexplained

inconsistency” with the 2016 Rule, id. at 109. The court vacated the rules effective October 16,

2018, after which the 2016 Rule went into effect. JSOF ¶ 15.

III. The Rulemaking at Issue

A. The 2017-18 Negotiated Rulemaking

The same day ED issued its stay, it announced its intention to establish a negotiated rulemaking

committee “to develop proposed regulations to revise the [2016] regulations on borrower defenses

to repayment of Federal student loans and other matters.” AR-C-1. That committee met in Novem-

ber 2017, January 2018, and February 2018. See 2018 NPRM, AR-B-1, 9.

In those sessions, ED’s designated “negotiator” repeatedly treated the repeal of the 2016 Rule

as a fait accompli, and refused to allow any discussion of the 2016 Rule or whether it was wise to

repeal it. See, e.g., Connor Decl., Ex. B (Nov. 13, 2017 Trans.) at 16 (51:43) (“As far as we’re

concerned, the starting point is the 1994 Regulations.”);5 AR-F-663:4–8 (Feb. 14, 2018 Trans.)

5 Although the Certified Administrative Record contains transcripts of later negotiated rulemaking

sessions, it appears ED did not prepare such a transcript for November 13, 2017. The court may

consider the authenticated transcript submitted concurrently with this motion, nonetheless, in light

of the well-established principle that extra-record evidence is properly considered when “the ad-


8

(“Okay, but what I’m hearing are items that were in the 2016 reg. And we have already considered

those items at the Department, and for various reasons we have ruled them out.”). ED’s negotiator

also refused to allow discussion of topics she believed were related to either the Bauer or CAPPS

litigation, including ED’s position on the arbitration and class action provisions. Connor Decl., Ex.

B at 16 (51:43) (“I think because that is the main point of at least one lawsuit, we are unable to

comment on that.”); AR-D-475:4–8 (Nov. 15, 2017 Trans.) (“[W]e’re not really able to comment

on extensive information regarding where we are with arbitration right now.”). The negotiated

rulemaking committee disbanded on February 15, 2018 without reaching consensus.

B. The Proposed Rule

While the unlawful delay rules were in effect, on July 31, 2018, ED issued a notice of proposed

rulemaking, in which it “propose[d] rescission of the 2016 final regulations that [ED] delayed

through previous notification,” 2018 NPRM, AR-B-9. In that proposal, which included more bur-

densome procedures and a higher standard for obtaining relief, the elimination of nearly all disclo-

sure requirements, and a variety of other changes designed to limit institutional accountability, ED

acted “as if the delayed amendments from the 2016 final regulations were never published.” Id.

AR-B-67. During the thirty-day comment period that ended on August 30, 2018, more than 30,000

comments were submitted, including significant numbers of comments in opposition on behalf of

student and consumer advocates, civil rights organizations, veterans’ groups, legal services pro-

viders, and several states. JSOF ¶ 42.

ministrative record itself is so deficient as to preclude effective review” of compliance with a pro-

cedural requirement. Hill Dermaceuticals, Inc. v. FDA, 709 F.3d 44, 47 (D.C. Cir. 2013), cited in

Batalla Vidal v. Duke, No. 16-CV-4756(NGG), 2017 WL 4480198, at *1 (E.D.N.Y. Oct. 3, 2017).


9

C. The Final Rule

After the decisions in Bauer, ED officials publicly stated the agency would issue a new notice

of proposed rulemaking reflecting the Bauer decisions and that the 2016 Rule had gone into effect.

JSOF ¶ 43. ED did not do so, though. Instead, nearly a year after the 2016 Rule went into effect,

ED issued the 2019 Rule, based on the 2018 NPRM and comments submitted in summer 2018,

explaining that “an additional NPRM would further delay the finality of the rulemaking process.”

2019 Rule, AR-A-2. As discussed in greater detail below, without limitation, the 2019 Rule:

• Imposed a three-year limitations period on borrowers’ ability to raise claims, on both de-

faulted and non-defaulted loans (AR-A-9–10, 35–37 (discussing § 685.206(e) (2019));

• Eliminated provisions allowing ED to adjudicate claims on a group-wide basis (AR-A-12–

13);

• Imposed a new stricter standard for asserting defenses to repayment based on misrepresen-

tations, heightened borrowers’ evidentiary burden, and required borrowers to show “financial

harm” other than that associated with student loan debt (AR-A-14–35 (discussing § 685.206

(2019) generally);

• Eliminated conditions on the use of forced arbitration clauses and class action bans (AR-

A-52–58);

• Eliminated several mandatory disclosure requirements for schools that were in financially

precarious situations, had poor records of student success, or were closing (AR-A-89);

• Eliminated automatic closed school discharges (AR-A-60–61); and

• Curtailed and eliminated financial responsibility provisions (AR-A-73–89).

IV. Plaintiff NYLAG

Plaintiff New York Legal Assistance Group (NYLAG) is a nonprofit organization in New York

City that provides a variety of free services to low-income New Yorkers in the areas of immigra-

tion, government benefits, family law, disability rights, housing law, special education, and con-

sumer debt, among others. JSOF ¶ 54. NYLAG provides a number of services to student loan


10

borrowers who are seeking relief from their debt. NYLAG financial counselors, who are not law-

yers, provide information and guidance about a variety of debt relief programs. Id. ¶ 59. They

assist borrowers who are seeking closed school discharges and asserting borrower defenses. Id.

Staff attorneys and paralegals in NYLAG’s Consumer Protection Unit and Special Litigation Unit

also provide advice and assistance to borrowers seeking closed school discharges and borrower

defense relief, and provide legal representation to some borrowers in these processes. Id. ¶ 57.

LEGAL STANDARD

Under the APA, a reviewing court “shall hold unlawful and set aside agency action” that is

“found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,”

or “without observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (D). The question of

whether a rule is unlawful under the APA is “a legal one which the district court can resolve on

the agency record on a motion for summary judgment.” Cty. of Westchester v. U.S. Dep’t of Hous.

& Urban Dev., 116 F. Supp. 3d 251, 275–76 (S.D.N.Y. 2015).

ARGUMENT

I. Plaintiff Has Standing to Challenge the 2019 Rule.

Plaintiff New York Legal Assistance Group (NYLAG) is a non-profit organization that will be

directly impacted by the 2019 Rule. NYLAG has standing to seek relief here because “the organ-

ization has an injury-in-fact fairly traceable to a defendant’s conduct and likely redressable by a

favorable court decision.” Pen Am. Ctr., Inc. v. Trump, No. 18 CIV. 9433 (LGS), 2020 WL

1434573, at *7 (S.D.N.Y. Mar. 24, 2020) (citing N.Y. Civil Liberties Union v. N.Y. City Transit

Auth., 684 F.3d 286, 294 (2d Cir. 2012)).


11

“[A]n organization shows injury-in-fact where, as here, a policy has impeded, and will con-

tinue to impede, the organization’s ability to carry out its responsibilities.” Centro de la Comuni-

dad Hispana de Locust Valley v. Town of Oyster Bay, 868 F.3d 104, 110 (2d Cir. 2017) (quoting

N.Y. Civ. Liberties Union, 684 F.3d at 295) (cleaned up). A diversion of resources to respond to

harm caused by a challenged action constitutes an Article III injury. Id. at 111 (citing Havens

Realty Corp. v. Coleman, 455 U.S. 363, 379 (1982)).

The 2019 Rule will cause NYLAG to divert its resources in a number of ways. First, in elimi-

nating disclosure requirements, ED explicitly foisted the responsibility on student advocacy groups

to “help student [sic] become wise consumers on the front end.” 2019 Rule, AR-A-31. As ED

anticipated, NYLAG will be required to provide students with the information that the 2016 Rule

either mandated that schools provide themselves or obviated the need for. See, e.g., JSOF ¶ 63.

Second, the Rule will both increase the demand for assistance and increase the amount of resources

needed to assist students. The new claims standard and process are extremely burdensome and

difficult for the average student borrower to navigate on his or her own. See id. ¶ 64. The elimina-

tion of conditions on the use of class action waivers, AR-A-52–58, means students will be less

likely to be able to obtain relief through class actions. ED expressly recognized that such changes

would increase demand for entities like NYLAG. See, e.g., AR-A-41 (explaining that students do

not need “paid legal counsel” to seek relief under new rule, because “students may seek help from

legal aid clinics or take advantage of services from numerous student advocacy groups in submit-

ting a borrower defense to repayment application”). At the same time, given the additional com-

plexities of the application process, and the elimination of the option to submit group applications,

AR-A-12–13, NYLAG will be required to spend more time and resources helping each student.

See JSOF ¶ 65. Cf. Vara v. Devos, No. 19-cv-12175-LTS, 2020 WL 3489679 (D. Mass. June 25,


12

2020) (holding that, under pre-2019 rules, ED was required to adjudicate borrower defense appli-

cations submitted on behalf of a group).

The injuries NYLAG will suffer are analogous to those repeatedly acknowledged by courts in

this Circuit as sufficient to provide organizational standing. See, e.g., Make the Road N.Y. v. Cucci-

nelli, 419 F. Supp. 3d 647, 657 (S.D.N.Y. 2019) (finding standing where plaintiffs would “have to

expend additional resources helping clients prepare applications for adjustments, representing cli-

ents in removal proceedings, and conducting additional trainings” and “develop new materials for

legal information sessions that previously could be held on a groupwide basis but now require

individualized consultation due to the Rule’s complexity”); see also Olsen v. Stark Homes, Inc.,

759 F.3d 140, 158 (2d Cir. 2014) (standing based on organization’s need to divert resources “from

its other advocacy and counseling activities”); Nnebe v. Daus, 644 F.3d 147, 157–58 (2d Cir. 2011)

(standing for organization that provided counseling and assistance in obtaining counsel).

II. ED Failed to Comply with Required Procedure.

To enact a rule under Title IV of the HEA, ED must undertake public consultation and negoti-

ated rulemaking, and then proceed through notice-and-comment rulemaking required by the APA.

20 U.S.C. § 1098a; 5 U.S.C. § 553. In promulgating the 2019 Rule, ED failed to comply with these

procedural requirements in three ways: (1) It failed to provide a meaningful opportunity to discuss

the need for, and content of, a new rule during the negotiated rulemaking proceedings. (2) It relied

on a negotiated rulemaking and notice-and-comment process that were premised on the mistaken

assumption that the 2016 Rule never went into effect. (3) It included in the 2019 Rule a provision

that was not a logical outgrowth of the 2018 NPRM.


13

A. ED failed to engage in meaningful public consultation and negotiated

rulemaking before issuing the 2018 NPRM.

“Congress’s decision to enact a statutory negotiated-rulemaking requirement in Title IV re-

flects a congressional determination that the process itself is important.” Nat’l Educ. Ass’n v.

DeVos, 379 F. Supp. 3d 1001, 1028 (N.D. Cal. 2019). Requirements for public participation in the

rulemaking process are not mere formalities. Such requirements “ensure that affected parties have

an opportunity to participate in and influence agency decision making at an early stage, when the

agency is more likely to give real consideration to alternative ideas.” New Jersey v. EPA, 626 F.2d

1038, 1049 (D.C. Cir. 1980), quoted in NRDC v. U.S. EPA, 676 F. Supp. 2d 307, 313 (S.D.N.Y.

2009); see also Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1101 (D.C. Cir. 2009) (“The oppor-

tunity for comment must be a meaningful opportunity.”). For a negotiated rulemaking as to

whether to repeal a rule to be meaningful, there must, at the very least, be a willingness to discuss

whether to repeal that rule. Cf. Consumer Energy Council of Am. v. Fed. Energy Regulatory

Comm’n, 673 F.3d 425, 446 (D.C. Cir. 1982) (“the value of notice and comment prior to repeal of

a final rule is that it ensures that an agency will not undo all that it accomplished through its rule-

making without giving all parties an opportunity to comment on the wisdom of repeal.”).

Throughout the negotiated rulemaking, however, ED refused to allow discussion of several

relevant points—including the issue of whether or not to repeal the 2016 Rule at all, and ED’s

position on the arbitration and class action provisions. See, e.g., Connor Decl., Ex. B at 16; AR-F-

663:4–8; AR-D-475:4–8. Such a refusal to discuss relevant issues “because the agency was deter-

mined to stonewall” is grounds to “invalidate the rule eventually adopted by the agency.” USA

Group Loan Service, Inc. v. Riley, 82 F.3d 708, 714 (7th Cir. 1996) (interpreting HEA negotiated

rulemaking requirement).


14

B. ED was required to reinitiate, or at least reopen, the rulemaking after the 2016

Rule went into effect.

When relevant information comes to light after the close of the administrative record, “an

agency has an obligation to deal with newly acquired evidence in some reasonable fashion.” Am.

Iron & Steel Inst. v. EPA, 115 F.3d 979, 1007 (D.C. Cir. 1997); see also Catawba Cnty v. EPA,

571 F.3d 20, 45 (D.C. Cir. 2009). An agency must also “‘reexamine [its] approach[] if a significant

factual predicate changes” while rulemaking is ongoing. Portland Cement Ass’n v. EPA, 665 F.3d

177, 187 (D.C. Cir. 2011) (quotation omitted). That reexamination requires a new round of public

participation where it “would provide the first opportunity for interested parties to offer comments

that could persuade the agency to modify its rule.” NRDC v. U.S. EPA, 279 F.3d 1180 (9th Cir.

2002) (quoting Am. Water Works Ass’n v. EPA, 40 F.3d 1266, 1274 (D.C. Cir. 1994)).

Here, significant relevant changes occurred after the end of public participation. Both the

2017–18 negotiated rulemaking and the 2018 NPRM were based on the presumption that the 2016

Rule would not go into effect. See, e.g., Connor Decl., Ex. B at 16 (51:43); 2018 NPRM, AR-B-9

(“we describe the proposed changes to the regulations based on the currently effective regulations

and not the delayed provisions of the 2016 final regulations”). In 2018, after the court in Bauer

vacated the agency’s delays as unlawful and the 2016 Rule went into effect, that presumption was

no longer valid.

In addition, ED had refused during the negotiated rulemaking to discuss topics that were at

issue in Bauer. See Connor Decl., Ex. B at 16 (51:43) (negotiator refusing to discuss agency’s

position that 2016 Rule should be rescinded because it was “the main point” of the Bauer litiga-

tion). To the extent the litigation was ever a valid reason to preclude discussion of an issue central

to the need for a new rule, once Bauer was decided, it was not even arguably valid to refuse con-

sider comments on the issue.


15

“[T]he necessity for notice and opportunity to comment on [the 2016 Rule going into effect]

was greatly heightened because [ED] relied largely on” its experience implementing the 2016 Rule

to support the final rule. Idaho Farm Bureau Fed’n v. Babbitt, 58 F.3d 1392, 1403 (9th Cir. 1995).

See, e.g., AR-K-1, 5, 78. “[A]gencies may rely on their experience in administering statutes and

promulgating regulations so long as the agency identifies this and there is ‘an adequate opportunity

to respond.”’ Pharmaceutical Research & Mfrs. of Am. v. FTC, 44 F. Supp. 3d 95, 128 (D.D.C.

2014). And while “an agency may use ‘supplementary’ data, unavailable during the notice and

comment period, that ‘expands on and confirms’ information contained in the proposed rulemak-

ing” without reopening the comment period, it may only do so if there is “no prejudice” in doing

so. Solite Corp. v. U.S. EPA, 952 F.2d 473, 484 (D.C. Cir. 1991) (quoting Cmty. Nutrition Inst. v.

Block, 749 F.2d 50, 57–58 (D.C. Cir. 1984)). Here, the changed circumstances, and ED’s reliance

on them, did more than “expand on and confirm” the agency’s position in the 2018 NPRM. Mem-

bers of the public had no ability to comment on ED’s implementation of the 2016 Rule or to share

the experience of student borrowers under the Rule. Moreover, because ED’s negotiator refused

to entertain discussion about the wisdom of repealing the 2016 Rule based on the pending litigation

in Bauer, the committee should have been reconvened as well. Cf. Bauer I, 325 F. Supp. 3d at 97

(holding that the same legal standard governs whether negotiated rulemaking is required under the

HEA and whether notice-and-comment is required under the APA).

In the 2019 Rule, ED acknowledged that it had “initially considered publishing a second

NPRM that used [the 2016] regulations as a starting point,” rather than using the 1994 regulations

as the starting point. It stated that it decided not to do so to avoid “further delay [of] the finality of

the rulemaking process.” AR-A-2. The agency’s desire to move more quickly, however, did not

justify evasion of its statutory obligation with respect to public participation; such “an exception


16

to the public comment rule … would swallow the rule.” Williams v. Pierce, 708 F.2d 57, 64 (2d

Cir. 1983). Put simply, if an agency seeks to rely on new evidence or changed facts in adopting a

final rule, it must allow members of the public to weigh in on the impact of those changes.

C. The three-year limitations period for “defensive” claims was not a logical out-

growth of the proposed rule.

Where an agency conducts notice-and-comment rulemaking, “the final rule the agency adopts

must be ‘a logical outgrowth of the rule proposed.’” Long Island Care at Home, Ltd. v. Coke, 551

U.S. 158, 174 (2007) (quoting Nat’l Black Media Coalition v. FCC, 791 F.2d 1016, 1022 (2d Cir.

1986)). To provide members of the public with a meaningful opportunity to comment, an agency

“must describe the range of alternatives being considered with reasonable specificity.” Time

Warner Cable Inc. v. FCC, 729 F.3d 137, 170 (2d Cir. 2013) (cleaned up). In adopting a three-

year limitations period for “defensive” claims, ED failed to comply with these principles as nothing

in the proposed rule suggested ED was considering any limitations period for defensive claims.

An “affirmative” claim is one filed when a borrower’s loan is “not in collection proceedings.”

2018 NPRM, AR-B-11. A “defensive” claim is one raised “as part of a proceeding related to cer-

tain actions by the Department to collect on a Direct Loan.” Id. The 2016 Rule provided a six-year

limitations period for borrowers to file affirmative claims. 34 C.F.R. § 685.222(c), (d) (2016). That

limit was “only applicable to students’ claims for amounts already paid on student loans,” and ED

noted that “[a] borrower may assert a defense to repayment at any time.” 2016 Rule, AR-K-4.

In its NPRM, ED maintained a distinction between affirmative and defensive claims. Based on

its concern about “frivolous claims,” see infra at 19, the agency proposed either eliminating the

ability to file “affirmative” claims in their entirety, or limiting affirmative claims “to the three-year

period following the borrower’s departure from the institution to ensure that the institution would

have access to records that could be relevant to their defense.” 2018 NPRM, AR-B-11–12; see


17

also id. at AR-B-3. ED did not mention the possibility of imposing a three-year limitation in con-

nection with defensive claims. To the contrary, it stated that, “[u]nder the proposed standard, a

borrower may be able to assert a defense to repayment at any time during the repayment period,

once the loan is in collections, regardless of whether the collection proceeding is one year or many

years after a borrower’s discovery of the misrepresentation.” Id. at AR-B-16; see also id. at AR-

B-19 (“The proposed regulations do not impose a statute of limitations on the filing of a borrower

defense to repayment claim.”).

In its final rule, however, ED included “a three-year limitations period for both affirmative and

defensive claims.” 2019 Rule, AR-A-95–97 (discussing new § 685.206(e)(6)). ED’s discussion of

limitations periods in the NPRM “did not come close to foreshadowing” this change. New York v.

U.S. Dep’t of Health & Human Servs. (N.Y. v. HHS), 414 F. Supp. 3d 475, 560 (S.D.N.Y. 2019)

(citing Nat’l Ass’n of Psychiatric Health Sys. v. Shalala, 120 F. Supp. 2d 33, 39 (D.D.C. 2000)).

That members of the public had notice of potential changes to the limitations period for affirmative

claims is irrelevant, given that affirmative and defensive claims pose different policy considera-

tions. Because affected parties could not have anticipated a three-year limitations period for de-

fensive claims based on the 2018 NPRM, the rule is “procedurally defective.” Yale New Haven

Hosp. v. Azar, No. 3:18-CV-1230 (JCH), 2020 WL 2204197, at *9, *10 (D. Conn. May 6, 2020)

(citing Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1107 (D.C. Cir. 2014)).

III. The 2019 Rule is Arbitrary and Capricious.

In addition to ED’s procedural violations, the arbitrary and capricious reasoning provided in

the 2019 Rule independently warrants setting the Rule aside. “An agency action is arbi-

trary and capricious if the agency ‘has relied on factors which Congress has not intended it to con-

sider, entirely failed to consider an important aspect of the problem, offered an explanation for its


18

decision that runs counter to the evidence before the agency, or is so implausible that it could not

be ascribed to a difference in view or the product of agency expertise.’” NRDC v. U.S. Dep’t of

Energy, 362 F. Supp. 3d 126, 144 (S.D.N.Y. 2019) (quoting Motor Vehicle Mfrs. Ass’n of the U.S.,

Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). When reversing a prior position,

an agency must acknowledge that it is changing positions, and “show that there are good reasons

for the new policy.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2008); see also

Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125 (2016) (“Agencies are free to change

their existing policies as long as they provide a reasoned explanation for the change.”). This re-

quirement is “heightened where the ‘new policy rests upon factual findings that contradict those

which underlay its prior policy,’ as ‘a reasoned explanation is needed for disregarding facts and

circumstances that underlay or were engendered by the prior policy.’” Make the Road N.Y, 419 F.

Supp. 3d at 661 (quoting Fox); see also Yale-New Haven Hosp. v. Leavitt, 470 F.3d 71, 79 (2d Cir.

2006) (a court’s “review is particularly searching” where the agency is reversing course).

The 2019 Rule fails to meet these standards. ED’s reasoning is inconsistent with the record,

replete with illogical, unsupported, and conclusory statements, and fails to include meaningful

justification for its departures from both the policy and factual determinations contained in the

2016 Rule. Two overarching false premises infect the 2019 Rule: (1) that the availability of bor-

rower defense discharges impacts student behavior at and before enrollment, and (2) that, at the

claims stage, borrowers and unidentified third-party actors somehow game the system and act in

bad-faith. Relying on these unsupported false premises and ignoring the mountains of evidence

that bad-faith actions by schools led to the need for the 2016 Rule, ED adopted a scheme that

blames victims for being defrauded. And at the same time that ED was “urg[ing] students to make

informed consumer decisions,” 2019 Rule, AR-A-35, it made it harder for students to do so by


19

eliminating multiple disclosure requirements and allowing recipients of federal taxpayer funds to

force student borrowers into mandatory arbitration agreements and class action waivers, which the

record evidence shows student borrowers are ill-equipped to understand. As highlighted by the

examples discussed below, these deficiencies were pervasive and warrant vacatur of the 2019 Rule.

A. Changes to the claims process and standard for relief were arbitrary and capricious.

In overhauling the claims process and the standard to be applied in adjudicating applications,

ED relied on the supposed problem of “frivolous” claims, defined as those “that allege misrepre-

sentations that actually did not occur, that seek discharge from private rather than Federal loans,

or that seek relief from a school not associated with any of the borrower’s current underlying

loans.” 2019 Rule, AR-A-13. ED claimed that its denial of 9,000 applications on these grounds

showed that tougher standards than those in the 2016 Rule were necessary to protect taxpayers. Id.

at AR-A-13–14. First, no information about these applications is contained in the certified Admin-

istrative Record. Second, even if ED had evidence that 9,000 claims (over an unknown time period,

out of an unknown total) were denied as “unsubstantiated,” that evidence would not support tough-

ening the standards for borrower defense claims; rather, it would suggest that the standard was

adequately screening out claims that should be denied. There is no reason to believe that borrowers

who did not qualify under the 2016 Rule but nonetheless submitted claims would not have sub-

mitted those same claims under the 2019 Rule, requiring the same expenditure of agency resources

to process them. See Legal Aid Cmty. Comments (29073) at 13–14 (explaining flaws in agency’s

justification).6 Because these 9,000 claims “do not substantiate [ED]’s claim of a problem merit-

ing” making it even more difficult to obtain relief, “[ED]’s reliance even ‘in part on the basis of’”

6 ED has not included the comments submitted to the agency as part of the Certified Administrative

Record, but rather “incorporated [them] by [] reference,” referring to https://www.regula-

tions.gov/docket?D=ED-2018-OPE-0027. AR-J-1. Plaintiff thus refers to comments by the name


20

these claims “is enough to render the Rule arbitrary and capricious.” New York v. HHS, 414 F.

Supp. 3d at 546 (quoting Animal Legal Def. Fund v. Perdue, 872 F.3d 602, 619 (D.C. Cir. 2017)).

While purporting to be concerned about taxpayer harms, ED failed to consider taxpayer bene-

fits of the process and standard contained in the 2016 Rule; nowhere did ED address the “spillover

economic benefits” it had previously acknowledged. See 2016 Rule, AR-K-126. For example, in

2016, ED noted that increasing the availability of discharges would allow borrowers “to become

bigger participants in the economy, possibly buying a home, saving for retirement, or paying for

other expenses,” benefitting not just the individual borrowers, but the larger economy. Id. Numer-

ous commenters raised this issue. See, e.g., Ctr. for Responsible Lending (CRL) Comments

(28126) at 3; Nat’l Student Legal Def. Network (NSLDN) Borrower Defense Comments (31574)

at 9; Lawyers’ Cmte. for Civ. Rts. Under Law Comments (26266) at 3; N.Y. State Higher Ed.

Servs. Corp. Comments (28506); Nat’l Ass’n of State Student Grant & Aid Programs Comments

(1419) at 2. Because ED failed to acknowledge its reversal on this point and failed to provide a

meaningful explanation as to why it no longer considered these spillover economic benefits ger-

mane, its decisionmaking was arbitrary and capricious. See Encino Motorcars, 136 S. Ct. at 2127.

In addition to these pervasive flaws, ED’s adoption of specific changes to the claims process

was inadequately reasoned.

1. Three-year limitations period on “defensive” claims

ED’s imposition of a three-year limitations period for defensive claims, § 685.206(e)(6), was

invalid not only because it was not a logical outgrowth of the proposed rule, see supra at 16–17

of their author and unique identification number. Each comment is available at https://www.regu-

lations.gov/document?D=ED-2018-OPE-0027-[Identification Number]. Per the parties’ agree-

ment, they will submit a joint appendix containing each comment cited by the parties in summary

judgment briefing at the time ED files its reply memorandum.


21

but because ED’s justification was arbitrary and capricious. ED’s sole reason for this change was

an assumption that institutions would not have “the records needed to defend against” a borrower

defense claim more than three years after the end of a borrower’s enrollment. 2019 Rule, AR-A-

36. ED did not, however, consider any of the other factors that had previously led the agency to

treat affirmative and defensive claims differently for limitations purposes.

In the 2016 Rule, ED explained why defensive claims are treated differently from affirmative

ones for limitations purposes, relying on the FTC’s “Holder Rule,” 16 C.F.R. part 433, “general

State law principles,” and “general principles relating to the defense of recoupment.” See AR-K-

31–32, 34. ED quoted the Supreme Court’s decision in Bull v. United States, 295 U.S. 247, 262

(1935), for the statement that “[r]ecoupment is in the nature of a defense arising out of some feature

of a transaction upon which the plaintiff’s action is grounded. Such a defense is never barred by

the statute of limitations….” Id. at AR-K-34. ED’s historical reliance on the Holder Rule in deter-

mining statutes of limitations was explicitly raised in comments. See Legal Aid Cmty. Comments

(29073) at 15, Attachment 2. ED’s failure “even to acknowledge its past practice and formal poli-

cies regarding [defensive claims], let alone to explain its reversal of course…, was arbitrary and

capricious.” Am. Wild Horse Pres. Campaign v. Perdue, 873 F.3d 914, 927 (D.C. Cir. 2017).

In any event, a three-year limitations period for defensive claims is illogical. Inherently, bor-

rowers cannot make a defensive claim until they are in default and in collection proceedings. And

as a matter of law, borrowers are not required to begin making payments until six months after

they leave school—not the school that they took out the loan to attend, but any Title IV-eligible

school. 34 C.F.R. § 685.207(b)-(c). Thus, if a student leaves a school that defrauded them, and

enrolls in another school, their obligation to repay will not even begin until six months after they

leave the second school. For members of the active duty military, the grace period can be even


22

longer. 34 C.F.R. § 685.207(b)(2)(ii), (c)(2)(ii). Moreover, borrowers do not enter into default on

the first day their loan payments are due. Currently, all direct loans are in administrative forbear-

ance until September 30, 2020. CARES Act, H.R. 78, 116th Cong. § 3513(a) (2020). Even after

that period, ED will not consider a loan to be in default until a borrower fails to make scheduled

payments for at least 270 days. 34 C.F.R. § 682.200(b). If collections proceedings were to begin

on the very first day of default, an unlikely scenario, the earliest opportunity to raise a defensive

claim would be fifteen months after a student leaves school—nearly halfway through the three-

year period allowed under ED’s rule. If a student makes even a single monthly payment on their

loan, it would be even later. The three-year statute of limitations thus effectively eliminates the

possibility of defensive claims for a large number of student borrowers. Furthermore, as a result,

it encourages the filing of preemptive affirmative claims, contrary to ED’s stated goal of reducing

the number of affirmative claims, see, e.g., AR-A-9, and discourages students from making partial

or sporadic payments on their loans, as that would simply run out the clock on their ability to file

a defensive claim. ED’s failure to acknowledge and consider this obvious, important defect was

arbitrary and capricious. See State Farm, 463 U.S. at 43.

2. The new standard for relief

Under the 2016 Rule, a borrower is entitled to relief upon a showing of a “substantial misrep-

resentation” by their school, which includes not only intentional falsehoods, but “any statement

that has the likelihood or tendency to mislead under the circumstances,” including statements that

“omit[] information in such a way as to make the statement false, erroneous, or misleading.”

§ 668.71(c) (2016). The 2019 Rule adopted a “more stringent definition of misrepresentation” that

requires evidence of an institution’s intent to mislead or its reckless disregard for the truth to obtain


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relief. 2019 Rule, AR-A-17–18 (discussing § 685.206(e)(3) (2019)). ED also imposed a “docu-

mentation” requirement, explaining that “a borrower’s affidavit or sworn testimony” as to misrep-

resentations made by a school will not constitute sufficient evidence of a misrepresentation; rather,

borrowers must produce evidence showing the misrepresentation in writing. Id. at AR-A-30–31.

Finally, ED imposed a new independent “financial harm” requirement, insisting that, even if they

are able to produce written evidence of an intentional misrepresentation that induced them to take

out a loan, a borrower can only obtain relief if they show financial harm other than the student

debt they took out. Id. at AR-A-31–34 (discussing § 685.206(e)(4), (8) (2019)). These three com-

ponents together make it nearly impossible to obtain borrower defense relief.

In support of these changes, ED maintained that a less strict standard would cause students to

act recklessly, or even maliciously, in enrolling in schools and taking out loans. For example, ED

stated a higher standard was needed to address a concern that “students either alone, or with the

help of unscrupulous third parties, attempt to induce statements that could then be misconstrued

or used out of context to relieve borrowers who otherwise received an education from their repay-

ment obligations.” Id. at AR-A-29–30. This contention is absurd: ED is suggesting that “third

parties” are in cahoots with students, getting the students to trick schools into making misrepre-

sentations, enroll in courses, and take out thousands of dollars in loans, just so that years down the

line, the students can apply for borrower defense relief. Not surprisingly, no evidence in the record

supports the notion that this problem actually exists.

This lack of evidence also highlights the arbitrariness of ED’s repeated suggestion that a more

stringent standard, and a written evidentiary requirement, would encourage students to become

“wise consumers on the front end.” Id. at AR-A-31; see also id. at 30 (standard would encourage

“personal responsibility”); id. at 7 (“Students are not passive victims; they take an active role in


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making informed decisions.”). As ED noted in the 2016 Rule, “[g]athering evidence of intent

would likely be nearly impossible for borrowers. Information asymmetry between borrowers and

institutions, which are likely in control of the best evidence of intentionality of misrepresentations,

would render borrower defense claims implausible for most borrowers.” 2016 Rule, AR-K-12.

ED’s assertion that the increased evidentiary burden would not be problematic because students

could insist that, during enrollment, institutions provide them with “written representations and

documentation,” 2019 Rule, AR-A-20, is untethered to the reality of interactions between students

and predatory institutions. Such actors often engage in high-pressure sales tactics where students

lack bargaining power to force such institutions to do anything, much less put all of their repre-

sentations in writing. See, e.g., Legal Aid Cmty. Comments (29073) at 32, 41–42; Public Citizen

Comments (27568) at 23–24. ED’s suggestion that students are in control, while at the same time

eliminating disclosure requirements and financial responsibility triggers in other parts of the Rule,

ignores the well-documented problems which led to the crisis that gave rise to the 2016 Rule. See

2016 Rule, AR-K-37 (rule sought to “even[] the playing field for students”); see also Attys. Gen-

eral Comments (26408) at 4–5; Advocates for Basic Legal Equality (ABLE) Comments (27322)

at 1–2; The Institute for College Access & Success (TICAS) Comments (28060) at 1.

Even where students can obtain accurate written statements in such settings, such documents

cannot be presumed to cancel out the impact of misleading “oral statements (or omissions) made

by school representatives, for which no documentary evidence exists.” NSLDN Comments

(31574) at 7. For example, students have widely reported “that recruiters from various career pro-

grams made unsupported job placement claims or guarantees to them verbally in one-on-one re-

cruiting calls or in-person meetings that went further than the more general assertions of job read-

iness made in school advertisements. These borrowers were not provided written documentation


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of these promises, but remember what they were told and how it convinced them to enroll.” Legal

Aid Cmty. Comments (29073) at 41.

With respect to the financial harm requirement, ED claimed that such a requirement was a

“necessary deterrent to unsubstantiated claims,” such as anticipated claims predicated upon “dis-

appointments through their college experience and career, such as believing that they would have

been better served by a different institution or major.” 2019 Rule, AR-A-32. But the record does

not support the proposition that (1) students file borrower defense claims simply because they are

“disappointed” by their “college experience” or (2) a “financial harm” requirement would be the

appropriate means for dealing with such a problem. Id. Under either the 2016 Rule or the 2019

Rule, students are not entitled to borrower defense relief because they are “disappointed”; they are

entitled to such relief only if their school has made a misrepresentation or defrauded them. ED’s

strawman argument is evidence of arbitrary and capricious decisionmaking.

3. Elimination of the group claims process

The 2016 Rule contained a process by which ED could decide borrower defense claims raising

common issues on a groupwide basis. 34 C.F.R. § 685.222(f)–(h) (2016). ED repealed this provi-

sion in its entirety. 2019 Rule, AR-A-11–13. In doing so, ED cited unspecified “evidence of out-

side actors attempting to personally gain from the bad acts of institutions.” Id. at AR-A-11. ED did

not identify these actors or explain how the group resolution of administrative claims (which con-

tained no attorney fee-shifting or analogous provision) allowed them to “personally gain” in ways

that individual claims would not. No evidence in the record shows that anyone manipulated the

group claims process created by the 2016 Rule, or even that ED employed the process at all.

In contrast, the record includes detailed comments from legal services providers and state gov-

ernments—who lack any “personal” incentive—explaining the value of the group claims process


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to students and taxpayers. See, e.g., Legal Aid Cmty. Comments (29073) at 44–48; Attys. General

Comments (24608) at 11-12; N.Y.C. Dep’t of Consumer Affs. Comments (26489) at 3. The com-

ments explain how “group relief promotes equity and efficiency” and why “group relief is essential

to ensuring that cheated borrowers get relief.” Legal Aid Cmty. Comments (29073) at 44, 45.

ED barely acknowledged these concerns, discounting the increased burden associated with the

individual application requirement by stating that student borrowers must sign “a Master Promis-

sory Note—a complicated legal document—as well as other documents in order to sign a loan,”

and thus could be expected to have no more difficulty completing Borrower Defense applications.

2019 Rule, AR-A-12. This comparison is truly one of apples and oranges—signing a loan docu-

ment requires far less affirmative effort by a student than the highly complicated application pro-

cess for borrower defense under the 2019 Rule, which requires the gathering of evidence to estab-

lish multiple elements. Cf. id. at AR-A-14 (ED’s refusal to give credence to social science research

on consumer financial products on the grounds it was not “an apples-to-apples comparison.”). But

even if the applications were similar, students largely do not understand the terms and conditions

of their Master Promissory Notes and are often pressured to sign such documents quickly and

without understanding them. See, e.g., Legal Aid Cmty. Comments (29073) at 32; CRL Comments

(28126) at 17 (citing CFPB complaint alleging such conduct by one school); Public Citizen Com-

ments (27568) at 23 (collecting citations to student experiences). As one comment explains, “cli-

ents targeted by fraudulent, for-profit schools are the least prepared to navigate the Department’s

forms and systems, even when those forms and systems are significantly simpler than those likely

to be involved in borrower defense.” Legal Aid Cmty. Comments (29073) at 11. ED’s repeated

assertions that students will be able to complete applications unaided are belied by comments in

the record as to borrower experiences, see, e.g., id. at 23–24, 80; Coalition of 80 Organizations


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Comments (26150) at 2, as well as ED’s own recognition that students will benefit from assistance

from legal aid and other organizations, see, e.g., 2019 Rule, AR-A-41.

4. Amount of relief

The 2016 Rule set out factors for ED to consider in determining the amount of relief to award

a borrower that had successfully established a defense to repayment. For a borrower defense pred-

icated on a misrepresentation, the regulation required ED to consider the cost of and the value of

the education received. See 34 C.F.R. § 685.222(i)(2)(i) (2016). Although the new rule purports to

base relief on “the amount of monetary loss that a borrower incurs as a result of a misrepresenta-

tion,” 34 C.F.R. § 685.206(e)(12) (2019), in fact the regulation only identifies types of evidence

that shows the existence of any monetary loss—e.g., a period of unemployment—and does not

provide any guidance as to how much relief should be awarded based on that evidence. ED pro-

vided no explanation for this change, and the change was therefore arbitrary and capricious.

B. The rescission of conditions on the use of pre-dispute arbitration agreements and

class action waivers was arbitrary and capricious.

The 2016 Rule conditioned participation in ED’s Title IV programs on schools’ agreement not

to impose or invoke mandatory pre-dispute arbitration agreements and class action waivers on or

against students. 34 C.F.R. § 685.300(e)–(f) (2016). The 2019 Rule replaced those conditions with

a requirement that schools could use, but must disclose, such provisions. 34 C.F.R. § 668.51(h)

(2019); id. § 685.304 (2019). ED’s reasoning ignored the evidence in the record and failed to

adequately acknowledge its departure from its conclusions in the 2016 Rule.

Many commenters explained how mandatory arbitration agreements make it unlikely that stu-

dent borrowers will obtain any meaningful relief when they are defrauded by their schools. See,

e.g., Public Citizen Comments (27568) at 4–13; New Am. Comments (31868) at 42; Legal Aid

Cmty. Comments (29073) at 53–54, 56–59. ED rejected this extensive evidence, and instead relied


28

on a 2012 pamphlet published by the American Bar Association’s Section of Dispute Resolution

entitled the “Benefits of Arbitration for Commercial Disputes” for the proposition that arbitration

would be beneficial to student borrowers. 2019 Rule, AR-A-54 (citing AR-G-3358). ED’s charac-

terization of this pamphlet as “findings” by “the ABA,” id., represents either a misunderstanding

or a misrepresentation of the document. The ABA Section of Dispute Resolution is a group of

alternative dispute resolution professionals. See Am. Bar Ass’n, Section of Dispute Resolution,

“Section Membership,” https://www.americanbar.org/groups/dispute_resolution/membership/. A

pamphlet written by a group of professional arbitrators and mediators extoling the benefits of ar-

bitration is not an objective “finding” of the ABA, as ED made it out to be. Particularly given ED’s

purported “concern” that the availability of class action lawsuits would “benefit the wrong indi-

viduals, that is … lawyers and not wronged students,” AR-A-57, ED’s failure to acknowledge the

financial incentive of arbitrators to say good things about arbitration seems particularly disingen-

uous. Moreover, the discussion in the pamphlet was limited to the experiences of business-to-

business arbitration. ED’s extrapolation of its conclusions to the student borrower context, without

acknowledging this distinction, was irrational—particularly given that, in the very same section,

ED rejected a Department of Defense report on predatory lending as irrelevant because it focused

on different types of consumer loans. Id. at AR-A-55 (declining to consider conclusions of report

that examined “payday loans, car title loans, tax refund anticipations loans, and unsecured loans”).

ED’s rejection of limitations on the use of class action waivers also improperly relied on an

article concerning a completely different context—an advocacy piece about mass tort and securi-

ties class actions that ED cited for the proposition that class actions benefit “lawyers and not

wronged students.” Id. at AR-A-57 (citing James R. Copland, et al., Class Actions and Mass Torts,


https://www.americanbar.org/groups/dispute_resolution/membership/

29

Trial Lawyers, Inc. 2016, Manhattan Institute (2016), AR-G-730). ED did not explain how criti-

cism of lawyers handling other kinds of cases was relevant to the student borrower context. It also

failed to acknowledge that the article’s conclusion was directly contrary to conclusions in the 2016

Rule. There, ED addressed criticisms that “class actions benefit lawyers more than consumers, and

may result in modest returns for an individual member of the class,” noting that there was no

evidence of such a problem in the relevant market—post-secondary education—and that “recent

history shows the significant consequences for students and taxpayers in an industry that has ef-

fectively barred consumers from using the class action tool.” 2016 Rule, AR-K-101. ED was re-

quired to acknowledge and explain the inconsistency of its conflicting positions.

ED also reversed its 2016 position that “class actions have significant effects beyond financial

recovery for the particular class members, including deterring misconduct by the institution, de-

terring misconduct by other industry members, and publicizing claims of misconduct that law en-

forcement authorities might otherwise have never been aware of, or may have discovered only

much later.” 2016 Rule, AR-K-101. In the 2016 Rule, ED explained that it “expect[ed] that the

potential exposure to class actions will motivate institutions to provide value and treat their student

consumers fairly in order to reduce the likelihood of suits in the first place,” citing specific exam-

ples. Id. In 2019, ED’s only explanation for abandoning this position was that it was “possible”

that institutions that changed their practices after class actions were brought against them did so

for other reasons, “regardless of whether students had been able to bring class actions.” 2019 Rule,

AR-A-55. Such cursory speculation is insufficient to justify ED’s reversal, particularly in light of

the extensive record evidence in support of the 2016 position. See, e.g., Legal Aid Cmty. Com-

ments (29073) at 53–54; Ams. for Fin. Reform Ed. Fund Comments (13941) at 8–9; New Am.

Comments (31868) at 43–44; Am. Ass’n of Justice Comments (24647) at 5.


30

Throughout its discussion of arbitration and class actions, ED repeatedly referred to the con-

cept of choice, explaining that the “government does not know what is best for a particular stu-

dent.” 2019 Rule, AR-A-58. But while increasing consumer choice may be a valid policy goal,

both the record and ED’s 2016 findings make clear that allowing Title IV recipients to use man-

datory pre-dispute arbitration agreements and class-action waivers reduces consumer choice. No-

tably, the 2016 Rule allowed students and schools to enter into post-dispute arbitration agreements,

explaining that such agreements allow an “informed choice by the student,” AR-K-105, a fact that

ED ignored in 2019. See also New Am. Comments (31868) at 42–43 If arbitration really would

produce better, more efficient outcomes for students as ED claims, one would expect students to

make that choice, and the problem would be solved. As ED explained in 2016, though, there is no

such thing as “informed choice” in the context of pre-dispute agreements; it is “unrealistic to ex-

pect the students to understand what arbitration is and thus what they would be relinquishing by

agreeing to arbitrate,” and there is “no realistic way to improve this awareness.” 2016 Rule, AR-

K-103. Thus, ED concluded there was no reason to believe that “predispute agreements to arbitrate

will result in well-informed choices, particularly by students in the sector of the market in which

such agreements are most commonly used.” Id.; see also Public Citizen Comments (27568) at 23–

24 (noting pressure to sign without reading); Am. Ass’n of Justice Comments (24647) at 5–6 (not-

ing lack of bargaining power). ED did not acknowledge or explain its changed conclusion that

disclosure requirements would allow for well-informed choices. See 2019 Rule, AR-A-58.

C. ED’s elimination of disclosure requirements was arbitrary and capricious.

The 2016 Rule required for-profit institutions to make a variety of disclosures to students and

potential students. One provision required for-profit institutions to provide a notice in their pro-

motional materials if the median borrower had failed to pay off or reduce their loan balance by at


31

least one dollar, as calculated by ED. 34 C.F.R. § 668.41(h) (2016). Another required for-profit

institutions to inform students and prospective students if the institution had experienced an event

or condition that “triggered” requiring it to provide financial protection to ED, as “these triggers

identify events or conditions that signal impending financial problems.” AR-K-9 (discussing 34

C.F.R. § 668.41(i) (2016)). At the time, ED explained that such disclosures would “help students,

prospective students, and their families make informed decisions based on information about an

institution’s financial soundness and its borrowers’ loan repayment outcomes.” Id. at AR-K-2.

In 2019, ED eliminated both of these disclosure requirements. As to the loan repayment

disclosures, ED’s sole explanation was that, under the 2016 Rule, the agency determined whether

an institution must make repayment rate disclosures based on data submitted pursuant to a different

rule, known as the Gainful Employment rule, and it had rescinded the relevant provisions of the

Gainful Employment rule. 2019 Rule, AR-A-89. Although this fact justified a change to the 2016

disclosure requirement, it did not compel ED to eliminate it, and ED did not address alternative

methods of calculating loan repayment rates or disclosure requirements that would achieve the

same purpose. The failure to consider such alternatives was arbitrary and capricious. See Dep’t of

Homeland Sec. v. Regents of the Univ. of Cal., No. 18-587, 2020 WL 3271746, at *14 (U.S. June

18, 2020) (“[W]hen an agency rescinds a prior policy its reasoned analysis must consider the al-

ternatives that are within the ambit of the existing policy.” (citation omitted)); see also New York

v. HHS, 414 F. Supp. 3d at 557 (finding rule invalid where agency failed to consider alternatives).

ED also stated that the value of the disclosure requirement was “negated by not knowing the

comparable loan repayment rate at a non-profit or public institution.” 2019 Rule, AR-A-89. That

statement ignores the differences between these different kinds of schools, as well as the fact that

low loan repayment rates are far more prevalent in the for-profit industry than at non-profit or


32

public institutions, as explained in the 2016 Rule and in comments. See, e.g., 2016 Rule, AR-K-9

(“We apply the loan repayment rate disclosure only to the for-profit sector primarily because the

frequency of poor repayment outcomes is greatest in this sector.”); Attys. General Comments

(24608) at 2–3. The failure to address these differences was arbitrary and capricious.

ED addressed the elimination of the financial protection disclosures in a single sentence, claim-

ing that the benefit to students was outweighed by concerns for the “reputation” of schools in

precarious financial scenarios. See 2019 Rule, AR-K-89. ED did not address the contrary conclu-

sion in the 2016 Rule, AR-K-86, or the comments explaining how such disclosures provide incen-

tives for institutions to engage in sound practices, thus protecting both student borrowers and fed-

eral taxpayers. See NSLDN Fin. Responsibility Comments (24732) at 2–5; Attys. Gen. Comments

(26408) at 21–22; New Am. Comments (31868) at 29–32. The elimination of the financial protec-

tion disclosures is also inconsistent with ED’s repeated emphasis on the need for students to be-

come informed consumers. See supra at 30. ED did not acknowledge the fact, supported by the

record, that institutions hide their weaknesses in order to prop up failing institutions with federal

loan dollars, and that such practices led to the very problem the 2016 Rule aimed to ameliorate.

See id.; see also House Cmte. on Educ. & Workforce Comments (26856) at 5–6.

D. ED’s elimination of automatic closed school discharges was arbitrary and

capricious.

The 2016 Rule required ED to discharge the loans of students who did not re-enroll in any Title

IV-eligible institution within three years of closure of the school they had previously attended,

without requiring them to submit an application. 34 C.F.R. § 685.214(c)(2)(ii) (2016). At the time,

ED noted that such automatic discharges had been available under the 1994 regulations and pro-

vided “an important benefit to borrowers.” 2016 Rule, AR-K-113.


33

In eliminating the automatic discharges in 2019, ED stated that such discharges were contrary

to the “goals” of encouraging students to complete their educational programs. 2019 Rule, AR-A-

60. ED offered no evidence, however, that the availability of a discharge in three years encourages

students to pass up the opportunity to pursue another educational program and accrue interest on

their loans in the interim. To the contrary, the record shows a number of other factors that may

cause students to neither participate in a “teach-out” or pursue other educational opportunities in

the intervening three years after their school closes—including lack of opportunity, good faith

attempts to work to pay off debts, or lost interest in education because of the negative experience

associated with taking out loans for a worthless educational program. See, e.g., NYLAG Com-

ments (25400) at 1; Legal Aid Cmty. Comments (29073) at 84-86; New Am. Comments (31868)

at 34. ED also failed to address the extensive comments explaining how burdensome the closed

school discharge application process was, and that requiring students to undertake that process,

rather than provide them automatic relief, would lead students to be denied the relief they were

entitled to by statute. See, e.g., Legal Aid Cmty. Comments (29073) at 80.

At the same time ED eliminated automatic closed school discharges, ED also eliminated the

requirement that closing schools provide information to students about the (not-automatic) closed

school discharge process. See 34 C.F.R. § 668.14(b)(32) (2016). ED’s explanation that it is “the

Department’s, not the school’s burden to provide this information to students,” 2019 Rule, AR-A-

60, is inconsistent with the purpose of “Institutional Accountability” regulations, which is to seek

to hold accountable schools that have engaged in practices that have led to massive debt for stu-

dents at taxpayer expense. It is also inconsistent with the view expressed throughout the 2019 Rule,

discussed above, that providing students with information is key to their ability to succeed. As ED


34

stated in the 2016 Rule, closed school disclosures would help “the borrower to make an informed

decision based on full knowledge of the borrower’s options.” 2016 Rule, AR-K-109.

ED did not acknowledge, much less address, the obvious cumulative effect of eliminating the

requirement that schools disclose to students that they can file closed school discharge claims,

while at the same time eliminating the availability of automatic relief after three years. The harm

to students who lack knowledge that they are eligible for closed school discharges, as provided by

statute, is made worse by requiring them to affirmatively seek relief in all situations. ED’s elimi-

nation of each of these provisions was arbitrary and capricious.

CONCLUSION

For the foregoing reasons, Plaintiff’s motion for summary judgment should be granted and the

2019 Rule should be vacated.


/s/ Adam R. Pulver


Toby R. Merrill Adina H. Rosenbaum (pro hac vice)






(617) 522-3003

[email protected]






GROUP,

Plaintiff,

v.




Defendants.

No. 20 Civ. 1414 (LGS)

DECLARATION OF ADAM R. PULVER IN SUPPORT OF PLAINTIFF’S MOTION

FOR SUMMARY JUDGMENT

I, Adam R. Pulver, declare under penalty of perjury and pursuant to 28 U.S.C. § 1746,

that the following is true and correct:

1. I am counsel for Plaintiff New York Legal Assistance Group in this matter.

2. Attached as Exhibit 1 is a true and correct copy of a November 14, 2019 Declaration

of Ian Foss, filed by Defendants Elisabeth DeVos and the United States Department of Education

(ED) in the matter of Sweet v. DeVos, No. 19-cv-03674 (N.D. Cal.), with exhibits, as retrieved

from that court’s electronic docket.

3. Attached as Exhibit 2 is a true and correct copy of the March 15, 2019 “Guidance

Concerning Some Provisions of the 2016 Borrower Defense to Repayment Regulations,” as

retrieved from ED’s website.

Dated: Washington, DC /s/ Adam R. Pulver

June 29, 2020 Adam R. Pulver


DECLARATION OF IAN FOSS Case No.: 19-cv-03674-WHA

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JOSEPH H. HUNT Assistant Attorney General David L. Anderson United States Attorney MARCIA BERMAN Assistant Branch Director KATHRYN C. DAVIS R. CHARLIE MERRITT Trial Attorneys U.S. Department of Justice Civil Division, Federal Programs Branch 1100 L Street, NW Washington, DC 20530 (202) 616-8298 (phone) (202) 616-8470 (fax) [email protected] Counsel for Defendants

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

THERESA SWEET, et al.,

Plaintiffs,

v.

ELISABETH DEVOS, in her official capacity as Secretary of Education, and the UNITED STATES DEPARTMENT OF EDUCATION

Defendants.

No. 19-cv-03674-WHA DECLARATION OF IAN FOSS Honorable William H. Alsup

000320

Case 3:19-cv-03674-WHA Document 56-3 Filed 11/14/19 Page 325 of 342Case 1:20-cv-01414-LGS Document 40-1 Filed 06/29/20 Page 1 of 18

DECLARATION OF IAN FOSS Case No.: 19-cv-03674-WJA

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DECLARATION OF IAN FOSS

I, Ian Foss declare as follows:

1. My name is Ian Foss, I am over the age of 18, and currently serve as a Program Specialist at

Federal Student Aid office (“FSA”) of the United States Department of Education (“ED” or

“Department”). I have held this position since December 6, 2010. I have personal knowledge

of the matters set forth herein and if called as a witness, I could and would testify competently

thereto.

2. As a Program Specialist, I am a member of FSA’s Policy Liaison and Implementation office,

which, among other things, provides guidance for other FSA offices concerning the proper

implementation of regulations about, or that affect, the federal student financial aid programs,

including borrower defense.

3. Through my duties as a Program Specialist, my work on ED’s Borrower Defense (“BD”)

effort, and my discussions with ED staff working on the BD effort, I am generally familiar

with the process for implementing the BD framework.

2016 Rules Implementation Effort

4. The 2016 BD regulations (“2016 rule”) were promulgated to modify the original 1995 BD

regulation. However, in 2017 and 2018, the Department delayed the 2016 rule until July 1,

2019, while simultaneously engaging in a process to further revise the BD regulations. In

October 2018, the U.S. District Court for the District of Columbia struck down the delay

of the 2016 rule in Bauer v. DeVos, eventually causing the 2016 rule to go into effect.

5. The new regulations included several new provisions, including a change to a closed school

discharge provision, which previously only provided upon an application of the borrower

for a discharge of a loan taken to attend an educational institution that closed. 34 C.F.R.

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§685.214. The new provision added an automatic closed school discharge, 34 C.F.R.

§685.214(c)(2), which mandated that ED automatically discharge loans obtained by

borrowers to attend educational institutions that closed on or after November 1, 2013 if the

borrower did not subsequently re-enroll in any title IV-eligible institution within a period

of three years from the date of school closure.

6. The implementation of the new 2016 regulations necessitated multiple operational changes,

based on both the new closed school discharge provision and other measures. The changes

included the following:

Implement new Automatic Closed School Discharge:

· Every month, the Department executes a program, which relies upon loan disbursement and enrollment information contained in National Student Loan Data System (“NSLDS”), to identify borrowers who are eligible for an automatic closed school discharge.

· After the program is executed, a pre-notification communication via email and U.S. Mail is sent to identified borrowers by loan holders.

· Also after the program is executed, the Department instructs loan holders and its contractors to 1) discharge the applicable loans and 2) officially notify borrowers after the loans have been discharged.

Implement new repayment rates policies and procedures under the 2016 BD rule where none previously existed:

· Under the 2016 BD regulations, schools are required to provide a notice to students if their repayment rate is below a specific threshold described in the regulations.

· To calculate the repayment rate, the Department needed to modify applicable contracts to instruct its contractor to calculate the rate (which relies on millions of records), and provide specific details about which data in Departmental systems were to be used, the fields within that system that must be used, as well as how the rate was to be calculated using the identified fields.

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· In addition to systems modifications, the Department needed to develop procedures that would be used to permit schools to correct data in the system that would be used to calculate the repayment rate.

Implement new False Certification discharge process

· Create processes and triggers for new bases for borrowers to receive false certification discharge automatically.

Implement changes to BD claims adjudication

· The 2016 BD regulations established a procedural framework for the adjudication of borrower defense applications. This framework applied to both new applications and applications that were outstanding as of the date the 2016 BD regulations went into effect.

· One procedural difference that had to be accommodated under the 2016 BD regulations was providing notice to the school associated with the borrower’s application that the borrower had filed a BD application based on the school’s conduct and to give the school an opportunity to respond to the borrower’s allegations.

· To implement this procedural change, ED has had to examine the technological mechanism by which such notice would be sent, what information, precisely, would be sent to the school, how long to give the school before proceeding as though no response would be forthcoming, where any data received from the school would be stored and whether any given solution complied with the Privacy Act of 1974, as amended, draft contract modification documents, and procedures to evaluate that information, if received.

· The foregoing change is just one modification that affected pending BD applications. It does not encompass all changes, and does not include the changes necessary to implement a new Federal standard that would be used to determine whether a borrower qualifies for a borrower defense discharge, among other changes.

See Exhibit A (Summary of Modifications Necessitated by 2016 BD Rules), p. 2.

7. In June of 2019, the Department initiated a modification of its contract with Senture, LLC

to ensure the completion of changes necessitated by the implementation of the 2016 rule

by January of 2020. See Exhibit B (Modification of Contract with Senture, LLC dated

August 1, 2017), p. 3. The Department continues to monitor the progress of the process

000323



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and system changes, as well as servicer compliance with the new requirements.

I declare under penalty of perjury that the foregoing is true and correct.

Executed this ____ day of November, 2019 in Washington, DC.

___________________

Ian Foss

14

000324


Exhibit A


ONR Title: 2016 Rules

Request Originator, Organization: EU/ Business Operations

Sponsor: Jeff Appel

Organization: Policy Liaison and Implementation (PLI)

Category: Ongoing

Justification: Legislative requirement

Reason (Business Need):

The 2016 borrower defense to repayment regulation (2016 rule) was created to modify the original 1995 borrower defense to repayment regulation. However, in 2017, the Department issued a variety of regulatory documents to delay the 2016 rule to July 1, 2019, while also undergoing a process to further revise the borrower defense regulations.

In October 2018, the U.S. District Court for the District of Columbia struck down the regulatory documents supporting the delay of the 2016 rule as invalid under the Administrative Procedures Act. This caused the 2016 rule to become effective, retroactive to July 1, 2017. The 2016 rules established the following requirements:

• New borrower defense standards used to evaluate whether, for new loans, borrowers are eligible for discharge

• New borrower defense processes, including a group process, to determine borrower eligibility for discharge

• A requirement to automatically discharge loans due to school closure if a borrower doesn’t re-enroll within 3 years of the school’s closure

• New mandatory and discretionary triggers that could result in schools being required to provide a letter of credit

• A ban on pre-dispute mandatory arbitration and class action waiver clauses in enrollment agreements

• A disclosure requirement for proprietary schools to provide notices to students based on a ‘low,’ ED-calculated repayment rate

• A disclosure requirement for schools, which are required to provide a letter of credit to ED, pending the development by ED of the specific language required to be disclosed to the students

Although borrower defense issues were a significant part of the 2016 regulatory action, the 2016 rule established new and amended existing regulations unrelated to the borrower defense provisions. The work to expedite the implementation of the provisions of the 2016 rule is ongoing.

000325


The implementation of these requirements involves multiple work streams. There are six work streams and four business unit work stream owners: Business Operations (BO); Policy Liaison and Implementation (PLI); Program Compliance (PC); and the Enforcement Unit-Borrower Defense (EU-BD). See the chart below for the work streams, owners, and the scope of each work stream.

Work Stream Scope

Automatic Closed School Discharge/ Existing CSD (BO/PLI)

New automatic discharge if borrower is generally otherwise eligible and doesn’t enroll at another school <= 3 years from closure.

Financial Protection (PC/PLI)

New required and discretionary triggers for financial protection and disclosure requirements.

Arbitration (PC/PLI) Ban on pre-dispute mandatory arbitration and class action waivers for BD-like claims.

Repayment Rate (BO/PC/PLI) A school-level GE repayment rate must be calculated, and, if too low, schools must disclose low repayment rate to students.

False Certification (BO/PLI) Limited new bases for borrowers to receive false certification discharge automatically.

Borrower Defense (EU-BD/PLI) Created federal standard for evaluating BD claims and new processes for borrower and schools, including a group discharge process.

Change Description by work stream:

Automatic Closed School Discharge/ Existing CSD:

• FSA and financial partners to perform ongoing ACSD discharges

• Perform on-going ACSD discharges based on borrower eligibility

• Loan disbursement and enrollment information contained in NSLDS will be used to identify borrowers who are eligible for an automatic closed school discharge

• A pre-notification communication via email and U.S. Mail will be sent to identified borrowers by loan holders

• Loan holders will be instructed to 1) discharge the applicable loans and 2) officially notify borrowers after the loans have been discharged

• Implement changes in NSLDS for new discharge type and reports

• Design EDWA reporting to support discharge

Financial Protection

• Begin requesting financial protection based on new Letter of Credit (LOC) triggers

Arbitration

• Work with OPE to begin consumer testing for financial protection warnings for schools subject to new triggers

Repayment Rate

000326


• Determine repayment rate policy and procedures

• Begin contract modification to implement system changes to calculate new repayment rates

False Certification

• Create processes and triggers for new bases for borrowers to receive false certification discharge automatically

Borrower Defense

• Begin drafting technical requirements for updates to support 2016 Rules

• Begin design or build for new technical requirements on the BD platform to support the new 2016 Rules

• Begin contract modifications and other procedural changes to implement changes to core borrower defense processes and eligibility determinations, including, if necessary, a group discharge process

• Begin to close out BD applications if borrower is eligible to receive an ACSD when discharge processed by servicer(s)

• Updates to the Customer Engagement Management System (CEMS) platform will be necessary to accommodate the changes to the borrower defense tool necessitated by the 2016 Rules

• Design EDWA reporting to support BD changes

List any related Organizational Needs or Change Requests: CR-4983: ACSD borrower pre-notification and reporting CR-5000: NSLDS-Servicers create, implement, update new discharge type CR-5001: NSLDS-Servicers data provider notification CR-5005: ACSD processing and reporting (Phase II of 4912) CR-5017: Repayment Rate List systems, system components impacted by this change: CEMS NSLDS EDWA COD

List business area/external groups impacted by this change:

POLICY LIASON AND IMPLEMENTATION PROGRAM COMPLIANCE ENFORCEMENT UNIT COO BUSINESS OPERATIONS SERVICERS

Provide the target date for need to be met: 12/31/2019

000327


Exhibit B


000328


000329


000330


000331


000332


000333


000334


000335


3/15/2019 IFAP - Electronic Announcements

https://ifap.ed.gov/eannouncements/030719GuidConcernProv2016BorrowerDefensetoRypmtRegs.html 1/10

Posted Date: March 15, 2019

Author: Office of Postsecondary Education (OPE)

Subject: Guidance Concerning Some Provisions of the 2016 Borrower Defenseto Repayment Regulations

The U.S. Department of Education (Department) has determined that thisguidance is significant guidance under the Office of Management and Budget’s,Final Bulletin for Agency Good Guidance Practices.i Significant guidance isnon-binding and does not create or impose new legal requirements. TheDepartment is issuing this guidance to provide institutions of higher educationwith information to assist them in meeting their obligations under the HigherEducation Act of 1964 and implementing regulations, specifically at 34 CFR668.41, 668.171, and 685.300 that the Department enforces. ii

On November 1, 2016, the Department of Education published finalregulations concerning borrower defense to repayment and other relatedmatters in the Federal Register (81 Fed. Reg. 75,926). The original effectivedate (July 1, 2017) of these regulations was delayed by the Department, but byorder of the U.S. District Court for the District of Columbia in the case Bauer etal. v. DeVos, Civil Action No. 17-1330 (RDM) the 2016 Final Regulations tookeffect.

The Borrower Defense to Repayment Standard

The 2016 Final Regulations established a federal standard for borrowerdefense to repayment applications based upon judgments against institutions,breaches of contract by institutions, and substantial misrepresentations byinstitutions, in 34 C.F.R. § 685.222. This standard will be applied for borrowerdefense to repayment claims asserted as to loans first disbursed on or afterJuly 1, 2017.

The Financial Responsibility Events, Actions, and Conditions

Among other things, the 2016 Final Regulations included revisions to theDepartment’s regulations in 34 CFR 668.171, specifying the standardsinstitutions must meet to be deemed financially responsible. The 2016 FinalRegulations, in 34 CFR 668.171(h), require institutions to notify the Secretarywithin specified timeframes for any of the following events, actions, orconditions that occur on or after July 1, 2017. Cites below refer to the locationsof the definitions of each event, condition, or action, which you may see in the

Case 1:20-cv-01414-LGS Document 40-2 Filed 06/29/20 Page 1 of 10

https://www.gpo.gov/fdsys/pkg/FR-2016-11-01/pdf/2016-25448.pdf

https://www.federalregister.gov/documents/2016/11/01/2016-25448/student-assistance-general-provisions-federal-perkins-loan-program-federal-family-education-loan



2016 Final Regulations, at 81 Fed. Reg. 76,073 to 76,074 (pages 148-149 ofthe linked pdf):

Debts, liabilities, and losses (34 CFR 668.171(c)):

The institution has a debt or liability arising from a finaljudgment/determination (judicial or administrative proceeding) or fromsettlement.

A lawsuit against the institution is brought by a Federal or Stateauthority after July 1, 2017, on claims related to the making of a DirectLoan or the provision of educational services, which has been pendingfor more than 120 days.

A lawsuit (other than the type already noted) against the institution isbrought after July 1, 2017, where summary judgment motions have notbeen filed under certain circumstances or the institution’s summaryjudgment motion has been denied.

The institution is required by its accrediting agency to submit a teach-out plan.

For an institution with a composite score less than 1.5, any withdrawalof owner’s equity from the institution, unless the transfer is to an entityincluded in the affiliated entity group on whose basis the institution'scomposite score was calculated.

Non-Title IV revenue (violation of the 90/10 requirement)(34 CFR668.171(d)): If the institution did not derive at least 10 percent of its revenuefrom non-Title IV programs.

For publicly-traded institutions (34 CFR 668.171(e)): Certain actions by theU.S. Securities and Exchange Commission (“SEC”) or stock exchange onwhich the institution’s stock is listed.

Discretionary factors or events (34 CFR 668.171(g)):

The institution has received a citation by a state licensing or authorizingagency for failing state or agency requirements.

The institution has been placed on probation or issued a show-causeorder by an accrediting agency for a failure to meet an agency standard.

The institution has violated a provision or requirement in a loanagreement and there has been a default or delinquency under theagreement enabling the creditor to require an increase in collateral, achange in the contract, an increase in interest rates or payments, orother sanctions, penalties, or fees.


https://www.federalregister.gov/documents/2016/11/01/2016-25448/student-assistance-general-provisions-federal-perkins-loan-program-federal-family-education-loan



Notifications of Financial Responsibility Actions, Events, or ConditionsOccurring Between July 1, 2017, and the Present

We recognize that some institutions may have had one or more of the events,actions, or conditions occur between July 1, 2017, and the date of thisannouncement and, in light of the delays and court orders, are uncertain abouthow to comply with these financial responsibility requirements.

For the majority of the financial responsibility standards addressing the debts,liabilities, and losses under 34 CFR 668.171(c), we recognize that the impact ofsuch events will have been reflected in the institution’s most recent financialstatement submitted after July 1, 2017. As a result, an institution needs tosubmit a separate notification to the Department of the following eventsoccurring after the fiscal year end for the most recent annual audit submissionsubmitted to the Department:

Debts, liabilities, and losses

The institution has a debt or liability arising from a finaljudgment/determination (judicial or administrative proceeding) or fromsettlement.

The institution is required by its accrediting agency to submit a teach-out plan.

For an institution with a composite score less than 1.5, any withdrawalof owner’s equity from the institution.

For lawsuits, we will require institutions to notify the Department of:

A lawsuit against the institution brought by a federal or state authority afterJuly 1, 2017, on claims related to the making of a Direct Loan or theprovision of educational services, which has been pending for more than120 days and which is still pending as of the date of this announcement.

A lawsuit (other than the type already noted) that is still pending as of thedate of this announcement against the institution and was brought after July1, 2017, where summary judgment motions have not been filed undercertain circumstances or an institution’s summary judgment motion hasbeen denied.

For non-Title IV revenue (violations of the 90/10 requirement), an institutionmust notify the Department 45 days after the end of the institution’s first fiscalyear beginning on or after July 1, 2017.

For certain actions by the SEC or stock exchange on which the institution’sstock is listed for publicly-traded institutions, institutions must notify theDepartment of all such events occurring after July 1, 2017.




For state licensing or authorizing agency citations and accreditor show-causeorders or accreditor-imposed probation status, institutions must notify theDepartment of all such events occurring after July 1, 2017, unless they havebeen resolved as of the date of this announcement.

For violations of a requirement in a loan agreement, institutions must notify theDepartment of all such events occurring after July 1, 2017.

Notifications should be sent to [email protected] within 60 days of thiselectronic announcement.

Contact Information

We appreciate your diligence in maintaining compliance with the Title IVregulations. For help with notifications, please contact Tiffany Hill [email protected].

The Class Action Bans and Predispute Arbitration Agreements Provisions

The 2016 Final Regulations also included revisions to the Department’sregulations in 34 CFR 685.300 covering agreements between an eligibleinstitution and the Secretary for participation in the Direct Loan Program. Generally, these revisions include prohibitions on:

Internal dispute resolution (34 CFR 685.300(d)). An institution may notcompel any student to pursue a complaint based upon a “borrower defenseclaim” (generally, a claim that is or could be asserted as a borrower defenseclaim by a borrower under the Department’s administrative process, seebelow) through an internal dispute process before the student presents thecomplaint to an accrediting agency or government agency authorized tohear the complaint.

The Department’s administrative process allows a Direct Loan borrower torequest a discharge of the borrower’s loan based upon an act or omissionof the institution attended by the student that relates to the making of aDirect Loan for enrollment at the institution or the provision of educationalservices for which the loan was provided, under standards established inthe Department’s regulations at 34 CFR 685.206(c) and 34 CFR 685.222.

Class action bans (34 CFR 685.300(e)). An institution may not seek to relyin any way on a predispute arbitration agreement or other predisputeagreement with a student who has obtained or benefited from a Direct Loanwith respect to any aspect of a class action that is related to a borrowerdefense claim (as defined above).

Predispute arbitration agreements (34 CFR 685.300(f)). An institution maynot enter into or seek to rely in any way on a predispute agreement to


mailto:[email protected]




arbitrate a borrower defense claim (as defined above), or any aspect of aborrower defense claim, with a student who obtained or benefited from aDirect Loan.

In addition to the prohibitions above, institutions must submit certain records tothe Department:

Arbitral records (34 CFR 685.300(g)). An institution must submit copies ofcertain records in connection with any claim filed in arbitration by or againstthe institution concerning a borrower defense claim.

Judicial records (34 CFR 685.200(h)). An institution must submit copies ofcertain judicial records in conjunction with any claim concerning a borrowerdefense claim filed in a lawsuit by the institution against the student or byany party, including a government agency, against the institution.

Because the 2016 Final Regulations are now in effect, institutions are requiredto implement these changes.

Nothing in these regulations prohibits an institution from having and enforcing amandatory predispute arbitration requirement or class action ban in connectionwith any claim not concerning a borrower defense claim or in connection withany claim asserted by a student who is not a Direct Loan borrower. A claim isnot a borrower defense claim if it is not based upon an act or omission of theinstitution attended by the student that relates to the making of a Direct Loan forenrollment at the institution or the provision of educational services for whichthe loan was provided, such as a personal injury tort claim or a sexual or racialharassment claim. The regulations, at 34 CFR 685.300(e)(3) and (f)(3),specifically note that the issue of whether a claim is “a claim regarding themaking of a Direct Loan or the provision of educational services for which theloan was provided,” (i.e., a borrower defense claim) is to be decided by thecourt.

In addition, as explained in 34 CFR 685.300(f)(1)(ii), a student may enter into avoluntary post-dispute arbitration agreement with an institution to arbitrate aborrower defense claim. In other words, these regulations do not prohibit aninstitution from providing an arbitration process for students who have borrowerdefense claims, or any other claims, who voluntarily agree to arbitration after agrievance has been raised with the institution.

Implementation of the 2016 Final Regulations for Existing PredisputeArbitration Agreements and Class Action Bans

We recognize that some institutions may have entered into mandatorypredispute arbitration agreements or other predispute agreements addressingarbitration and class action bans between the 2016 Final Regulations’ originaleffective date of July 1, 2017, and the date of this announcement. Although




such agreements cannot be enforced in relation to any borrower defense claimmade by a Direct Loan recipient, the Department recognizes that institutionsmay need time to prepare new enrollment agreements that omit suchmandatory predispute arbitration requirements or include the languagespecified by the regulations if the agreements address arbitration and classaction bans. Institutions need not issue new enrollment agreements orcontracts to students who may have accepted the terms of such a predisputearbitration agreement or class action ban in an earlier enrollment agreement orcontract, but may instead provide written notification to those students that suchagreements will not be enforced with respect to borrower defense claims forDirect Loan recipients. Therefore, institutions may do either of the following tocomply with the requirements of revised 34 CFR 685.300:

Amend the mandatory predispute arbitration agreement within 60 days ofthis announcement, to contain the language specified in 34 CFR 685.300(f)(3)(iii)(A) (see Appendix) and, if the agreement also addresses class actionsor there is a separate predispute agreement addressing class actions, tocontain the language specified in 34 CFR 685.300(e)(3)(iii)(A) (seeAppendix);

OR

Within 60 days of this announcement, begin complying with the noticerequirements. Institutions may also choose, within 60 days of thisannouncement, to begin providing notice to students that mandatorypredispute arbitration agreements will not be enforced for borrower defenseclaims, no later than at the point of exit counseling or the date on which theinstitution files its initial response to a demand for arbitration or service of acomplaint from a student who has not already received a notice or amendedagreement. Institutions may also achieve compliance by providing notice toall impacted students now, if they choose. The content of the notice isspecified in 34 CFR 685.300(f)(3)(iii)(B) (see Appendix) as to existingpredispute arbitration agreements. The content of the notice for a classaction ban — whether in an existing predispute arbitration agreement or in aseparate predispute agreement — is specified in 34 CFR 685.300(e)(3)(iii)(B) (see Appendix).

The regulation is clear on the requirements for predispute arbitrationagreements and other predispute agreements entered into after the 60 daywindow provided in this announcement.

Finally, the unenforceability of predispute arbitration agreements and classaction bans under 34 CFR 685.300 also applies in the context of an arbitrationproceeding between an institution and a student under the circumstancesdescribed in the regulation (i.e., if the proceeding relates to a borrower defenseclaim, as defined above and in the regulation, and the student involved in thearbitration with the institution is a Direct Loan recipient) that was ongoing as of




October 16, 2018, and was initiated pursuant to a predispute arbitrationagreement. A student involved in an ongoing arbitration may choose tocontinue with the arbitration process toward a final conclusion but has noobligation to do so under the regulation.

For institutions with arbitrations that are ongoing and not final at the time of thisannouncement, institutions must provide students with the notice(s) describedabove within 10 days of this announcement. Institutions may continue to offervoluntary opportunities for students to engage in arbitration on issues related toa borrower defense claim after a grievance has been raised, but institutionsmay not require a Direct Loan recipient to engage in arbitration prior to filing aborrower defense claim. Institutions may also continue to enforce mandatorypredispute arbitration agreements or bans on class action suits for complaintsunrelated to a borrower defense claim; however, the court is to make thedetermination as to whether the claim is a borrower defense claim.

Submission of Arbitral and Judicial Records

For any dispute in arbitration based on a borrower defense claim that waspending as of July 1, 2017, or initiated after July 1, 2017, a copy of the arbitralrecords specified in 34 CFR § 685.300(g) should be sent [email protected].

For any lawsuit based on a borrower defense claim that was pending as of July1, 2017, or initiated after July 1, 2017, a copy of the judicial records specified in34 CFR 685.300(h) should be sent to [email protected].

Institutions must submit existing records no later than 90 days of this electronicannouncement and must comply with the timeframes set forth in the regulationsfor submission of future records.

Contact Information

We appreciate your diligence in maintaining compliance with the Title IVregulations. For help with submission of arbitral and judicial records, contactSara Hayhurst at [email protected].

Repayment Rate and Financial Protection Disclosures

The 2016 Final Regulations also added a requirement, 34 CFR 668.41(h), thatfor a proprietary institution that does not meet a certain loan repayment rate forthe majority of its student loan borrowers, the institution must include aspecified warning in its promotional materials that are made available toprospective or enrolled students. As contemplated by 34 CFR 668.41(h)(3)(i)(A), the Department will inform institutions of the form, place, and manner thatthe warning must appear in institutions’ promotional materials in an upcomingFederal Register notice. Further, the Department will be engaging in consumer







testing in the near future to ensure the warning is meaningful and helpful tostudents. As a result, institutions will be informed through future FederalRegister notices about when and how they must provide repayment ratewarnings to students in the future and of any changes to the content of thewarning.

The 2016 Final Regulations also added a requirement, 34 CFR 668.41(i), thatall institutions deliver a disclosure to enrolled and prospective studentsregarding the occurrence of certain triggering events that are indicators offinancial responsibility or other events. As specified in 34 CFR 668.41(i)(2) and(3), the Department will be engaging in consumer testing in the near future todetermine the triggering events for which disclosure will be required and todetermine the form of the disclosure to ensure the disclosure is meaningful andhelpful to students. As a result, institutions do not need to provide thedisclosure to students until further notice from the Department.

Appendix

To amend predispute agreements covered by 34 CFR 685.300, institutionsmust include the following provisions:

For predispute arbitration agreements, under 34 CFR 685.300(f)(3)(iii)(A):

We agree that neither we nor anyone else who later becomes a party tothis predispute arbitration agreement will use it to stop you from bringinga lawsuit concerning our acts or omissions regarding the making of theFederal Direct Loan or the provision by us of educational services forwhich the Federal Direct Loan was obtained. You may file a lawsuit forsuch a claim or you may be a member of a class action lawsuit for sucha claim even if you do not file it. This provision does not apply to otherclaims. We agree that only the court is to decide whether a claimasserted in the lawsuit is a claim regarding the making of the FederalDirect Loan or the provision of educational services for which the loanwas obtained.

For predispute arbitration agreements that address class actions, pursuantto 34 CFR 685.300(e)(3)(iii)(A):

We agree that neither we nor anyone else who later becomes a party tothis agreement will use this agreement to stop you from being part of aclass action lawsuit in court. You may file a class action lawsuit in courtor you may be a member of a class action lawsuit even if you do not fileit. This provision applies only to class action claims concerning our acts




or omissions regarding the making of the Federal Direct Loan or theprovision by us of educational services for which the Federal DirectLoan was obtained. We agree that only the court is to decide whether aclaim asserted in the lawsuit is a claim regarding the making of theFederal Direct Loan or the provision of educational services for whichthe loan was obtained.

For institutions deciding to provide notices to students rather than amend theoriginal predispute agreements, the notices must contain the followinglanguage:

For predispute arbitration agreements, under 34 CFR 685.300(f)(3)(iii)(B):

We agree not to use any predispute arbitration agreement to stop youfrom bringing a lawsuit concerning our acts or omissions regarding themaking of the Federal Direct Loan or the provision by us of educationalservices for which the Federal Direct Loan was obtained. You may file alawsuit regarding such a claim or you may be a member of a classaction lawsuit regarding such a claim even if you do not file it. Thisprovision does not apply to any other claims. We agree that only thecourt is to decide whether a claim asserted in the lawsuit is a claimregarding the making of the Direct Loan or the provision of educationalservices for which the loan was obtained.

For predispute arbitration agreements, or other predispute agreementsaddressing class actions under 34 CFR 685.300(e)(3)(iii)(B):

We agree not to use any predispute agreement to stop you from beingpart of a class action lawsuit in court. You may file a class actionlawsuit in court or you may be a member of a class action lawsuit evenif you do not file it. This provision applies only to class action claimsconcerning our acts or omissions regarding the making of the FederalDirect Loan or the provision by us of educational services for which theFederal Direct Loan was obtained. We agree that only the court is todecide whether a claim asserted in the lawsuit is a claim regarding themaking of the Federal Direct Loan or the provision of educationalservices for which the loan was obtained.

i 72 Fed. Reg. 3432 (Jan. 25, 2007). Seehttps://www.gpo.gov/fdsys/pkg/FR-2007-01-25/pdf/E7-1066.pdf.


https://www.gpo.gov/fdsys/pkg/FR-2007-01-25/pdf/E7-1066.pdf



ii If you are interested in commenting on this guidance, please email yourcomment to Annmarie Weisman at [email protected] and LindaShewack at [email protected] or write to us at the following address:

Annmarie Weisman or Linda Shewack U.S. Department of Education 400 Maryland Avenue SW Washington, DC 20202

For further information about the Department’s guidance processes, please visithttps://www2.ed.gov/policy/gen/guid/significant-guidance.html). Author: Federal Student Aid and Office of Postsecondary Education.




https://www2.ed.gov/policy/gen/guid/significant-guidance.html




GROUP,

Plaintiff,

v.




Defendants.

No. 20-cv-01414 (LGS)

DECLARATION OF EILEEN CONNOR

I, Eileen Connor, hereby submit this declaration pursuant to 28 U.S.C. § 1746 and declare

as follows:

1. I am the Legal Director at the Project on Predatory Student Lending at the Legal Services

Center of Harvard Law School, and an attorney of record for Plaintiff in the above-captioned

matter.

2. In November 2018, I obtained from a cloud-based storage platform an .mp3 audio file,

titled “BD NR session 1 Monday afternoon,” recording part of the Department of Education’s

Negotiated Rulemaking session on borrower defense that took place on November 13, 2017. I

did not edit, alter, or modify the audio file at any point. A copy of this recording, marked as

Exhibit A, will be served upon Defendants and be filed with the Court.

3. I listened to the full audio recording from start to finish.


2

4. On the audio recording, I am able to recognize the voice of the principal negotiator at the

Department’s Office of Postsecondary Education, Annemarie Weisman. Ms. Weisman has

represented the Department at negotiated rulemakings at which I have been present.

5. Throughout the audio recording, I recognize Ms. Weisman as the person answering

questions from negotiators on behalf of the Department.

6. Approximately 43 minutes and 45 seconds into the audio recording, I recognize Ms.

Weisman as stating that “we are considering our starting point to be the 1994 regulations.”

7. Approximately 51 minutes and 43 seconds into the audio recording, in response to

questions as to whether the Department would rescind the 2016 borrower defense rules, I

recognize Ms. Weisman as responding that the Department was “unable to comment on that”

because it was the “main point” of a lawsuit, and that “as far as we're concerned, the starting

point is the 1994 Regulations.”

8. On November 5, 2018, from the cloud-based storage platform, I uploaded this audio

recording to the website of a transcription service, GoTranscript. I placed an order for the audio

file to be transcribed. GoTranscript assigned the order number S2T5806385 to this request.

9. On November 7, 2018, I received an email notification from GoTranscript that my order

was complete. From the GoTranscript website, I downloaded a text file (.doc) containing a

transcription of the audio file. I read the transcript and found it to accurately reflect the contents

of the audio file. An unedited copy of the transcript of the November 13, 2017 meeting, as

produced by GoTranscript, is attached hereto as Exhibit B.

10. An invoice from GoTranscript dated November 5, 2018, is attached hereto as Exhibit C.


3

I declare under penalty of perjury that the foregoing is true and correct. Executed on June 29,

2020 in Jamaica Plain, Massachusetts.

_______________________________

Eileen Connor


Exhibit A

Recording, titled “BD NR session 1 Monday afternoon,” to be

served upon Defendants and filed with the Court


Exhibit B

November 13, 2017 Negotiated Rulemaking Session

Transcript from GoTranscript


File name: BD NR session 1 Monday afternoon.mp3

1

[00:00:00] Anne Marie: The idea of audio recording might be something that we can do. We will not be able to get an answer on it today. So, we have to get the perspective of the committee to find out if that would be a reasonable compromise, if we could do an audio recording that would be made available at some point after the session ended.

No guarantees from [inaudible 00:00:24] get it off from the website, but if that's a reasonable compromise in your eyes. It would be something that the department would have to do to have that made complete, so that we thought that we could give assurance to people that it was not edited, that it was a complete version of what was said.

[00:00:55] Member 1: I have a question about what was ins and outs here based on that particular option. In the Federal Register, we do not explicitly state that any type of audio or video recording would be made available, and in Federal Register for the public hearings, will you indicate that "Please be aware. We could do video, et cetera". Do we have to explicitly state in the Federal Register that that is an option for access like we do with these public hearings in order to move forward? Does that have to be amended, or is that a separate protocol that needs to be developed?

[00:01:36] Anne Marie: My understanding is that it would be a protocol issue. We see the neg reg process perhaps a little differently than some of you knew, and I think I do want to make a quick point to clarify that. When you see the public hearing process as a much more open process because it's people speaking. They know that there's a transcript specifically being provided word for word.

We arrange for that, and we set that up from the beginning. My understanding is that we do not have to specifically say what we're doing in the Federal Register regarding any recording, whether that would be videotaping, audio recording, or whatever. I think that at this point, that is up to the committee to decide what they feel comfortable doing.

But in our minds, this meeting is different than a public hearing where everybody just have five minutes to make a statement and people do tend to want to record those. We want to make sure that we have integrity in this committee and the people feel the ability to work on it as similar to a working group in a sense that you're forming your opinions as you go, and that it's very difficult to be recorded three full days in a row, three times, as you are forming your opinions and discussing an issue that's so critical. [inaudible 00:02:56]

[00:02:57] Member 1: For the record, I agree with you. I just wanted to know from a logistical standpoint if that has to be taken care of, otherwise we have a new point, or at least there's no need to argue. If it has to be amended, we needed to know that first before we could make a decision.

[00:03:16] Facilitator: As a quick point of clarification, what would the time frame be? I'd say we weren't sure but if we're going to take that recording for our constituencies



2

would like some sort of timeliness to that? I'm not expecting the next day, but maybe to say six months, eight months, two weeks which is the rough--?

[00:03:37] Anne Marie: Because we haven't arranged for the service at this point, I can't speak to a time frame. I know that I was told that it would certainly not be during the session, that it would be after the fact. Unfortunately, I can't speak to it any further than that.

[00:04:02] Facilitator: Any other thoughts or words on the proposals made by Anne Marie[sic] to at least considered a audio recording available now for that? Is this something that it's just worth having them explored? Would it allow us to follow or whatever? At least 20 some people at this table. Some comments, please.

[00:04:28] Member 2: I have a question during the procedure. If we deemed it forward and approve the protocols, but then it turns out that the department can't provide those audios ever since, what then happens?

[00:04:48] Facilitator: Just me speaking here as some solitary [unintelligible 00:04:50] not obviously binding any of the working group, I would think process wise, we would have to determine our acceptance of the protocols, whether that was an acceptance in general for the remainder of the process, regardless of the outcome, or whether that is acceptance of the protocols as it is until we get the decision. At that point, if it's not an option, we reopen or we deny, check the protocols until we have that decision.

Those are the three options I would see, again, just speaking from a facilitator, I'm not making any decisions for the group here, and would be happy to hear other options. I see those as the three ways it could be handled just from a facilitator perspective.

With that being noted, we have to have some agreements on the protocols to continue acceptance and to get back to the petitions we discussed and the issues that we discussed before lunch. That would obviously require us to choose the one of the first two options at least for today, regardless of whether we'll reopen or not.

[00:06:12] Anne Marie: I really appreciate the department trying to come up and welcome the solutions. I want to say that we just need to restate then what the counter-proposal is in terms of potential practice, and also in writing the protocols with inter-proposal to what we want to leave as a [unintelligible 00:06:27] unchange? Then also we'll try to commit to develop our [unintelligible 00:06:32].

[00:06:40] Member 3: At this point, our suggestion would be that we keep 5E. I'm sorry, 5E, with the original language as it was distributed to you, and that we would like the time to investigate, which our goal is that we would have an answer for you in the morning regarding whether we could have an audio recording of the proceedings in lieu of live streaming, and we could certainly come up with language to explain what that would be.



3

We don't feel comfortable necessarily having language right now because I don't know specifically what the service would be that they would be able to arrange. I hesitate to throw something out there that isn't what we would come up with, and I prefer to do that later. It's more that we would add language that we include whatever things we came up with. My concern was that we have people on both sides of the issue before we took our break.

If we do something that is moving away from the direction that we talked about before, we talked about the idea of not wanting to cycle the conversation. If we have people who say, "Okay, now you're moving over to try to compromise this way, but now I'm not happy," we need to get a sense of would people be okay with this? Is this in your eyes a compromise or is it not?

[00:08:11] Member 2: How this remedy varies certainly, obviously, if the people are uncomfortable either [unintelligible 00:08:18] we got to do nothing. It sounds to me like the only concern is if it's a resolution of the issue. Sounds to me like the only substantiative challenge we address is that of the [unintelligible 00:08:35]. There's no argument that there is going to be an odd topic for that [unintelligible 00:08:43].

It's just that you want to make sure they get an authorized official record that reflects the fatality of the conversation. In which case, I hope you will consider allowing [unintelligible 00:09:00] given that their roles exist on official record against the [unintelligible 00:09:05] could be [unintelligible 00:09:08]. Because I think a part of the challenge is like doing it--

I really struggle to understand the meaning of the department attempting to regulate third-party [inaudible 00:09:20] . The department is in a position to declare the [unintelligible 00:09:27] public or not public as far as the protocol. None of the negotiators proposal to really take the proceeding, but we can certainly agree that negotiators will not [unintelligible 00:09:40] or not.

The [unintelligible 00:09:44] public or not public. For secretary [unintelligible 00:09:50] in a public venue where there is no repetition of funds [unintelligible 00:09:56]. So I think we need to resolve that issue. I recognize the importance of making sure that the [unintelligible 00:10:03] official record. I think that [unintelligible 00:10:09] that, but they only address it as if you simultaneously also allow the public to [unintelligible 00:10:16] if you have a question, police report, or whatever. If the concern is that only we need to talk about [unintelligible 00:10:25] we're going to have an official record [unintelligible 00:10:26].

[00:10:30] Anne Marie: I appreciate the comments, and I thank you, but I don't think that is the only concern. We've heard before we took our break that there are concerns from other committee members as well that it would cycle the conversation and that people don't want necessarily to have live streaming. We've tried to come up with something that wasn't quite as far as live streaming, but that would give us some, again, more official record that we could say we had some control over to alleviate one of the concerns.



4

It doesn't need to get all of the concerns. I think from our perspective, we were not interested in pursuing for the live streaming right now. We were hoping to hear that what we proposed was a compromise that people can live with, but I didn't know if we're there. Again, I don't want to hear the concerns of one group and not hear the concerns of another, and if we're trying to get a sense of where people are with that.

If people are comfortable with this, or if we need to keep trying to think of something else. That said, we have other issues that we'd like to try to cover. We have a position for membership that we're going to try to get to, but we can't move on to that until we come to some agreement on protocols and having some structure from which you're operating.

[00:11:53] Member 5: [unintelligible 00:11:54].

[00:11:56] Member 6: We can hear from some of the people that [unintelligible 00:11:58]. How do you feel about the proposed [unintelligible 00:12:06]?

[00:12:10] Anne Marie: Still not involved with it but [inaudible 00:12:12] .

[00:12:21] Facilitator: Before we go into vote, any other responses to the question at this time? I request that we also let the record would indicate that there were more concerns on both sides. That one side wanted the live streaming and one side did not.

[00:12:44] Member 2: I would like to request that the [unintelligible 00:12:46] anyone would like to express this proposal from the department of education and accept the protocol as is so that we can move on to important issues that really do affect our students.

[00:13:01] Facilitator: As facilitators, we can certainly do that. But we've always said we're open to discussion from the working group that we do follow that. In an effort to work [unintelligible 00:13:12]. Anne Marie, first, can you restate your proposal? Then second, I think we have to circle back to one of the comments we had before of what occurs if we come back tomorrow morning and this is not an option? Which we can address as well. If you could restate the proposal as you have it right now.

[00:13:36] Anne Marie: Right now, we're recommending that we use 5E as it was originally distributed to you, which says all committee meetings but not sub-committee meetings or conferences are open to the public. We also propose that we investigate this afternoon, and have hopefully again approved tomorrow morning, information about whether it will be possible for us to do an audio recording in lieu of the requested live streaming.

[silence]

Facilitator: Can we get a show of thumbs on the proposal as presented by Anne Marie?

[silence]



5

[00:14:37] Facilitator: Are there any thumbs down? With no thumbs down, that would appear to be consensus on that proposal. Is that correct? With that in mind that was our only open issue on the protocols in [unintelligible 00:14:59] . Is the working group willing to go vote on the protocol which would allow us to move forward at least until the point where we can [unintelligible 00:15:10]?

[00:15:17] Member 1: I am willing to move forward under the assumption that audio of the meeting will be available, and if it is not, that we revisit this issue.

[00:15:30] Facilitator: That's an addition to the proposal that if we do get a negative response tomorrow, we will revisit the issue. The working group help more with that amendment of the proposal. Questions?

[00:15:48] Member 5: If in fact that's the case that we are not happy, and the department comes up with it tomorrow, you said reopen the protocol discussion.

[00:16:04] Facilitator: The amendment would reopen the protocol discussion depending on the result of that investigation. What that would allow us to do from a facilitator standpoint is to continue to use the rest of today effectively until the protocol's added as is. Whereas if we do not have that, we do not operate under protocols today, we can't move on to the other items of discussion while we await the investigation.

Can we see a show of thumbs on the proposal will be amended that if we do get a negative response from the department's investigation that we will reopen the issue? A show of thumbs? Okay. I do not see any thumbs down. Can we vote on the protocols as a whole? Understanding that if we get a negative response we will revisit 5E and this will be a formal vote on the protocol with that amendment, and obviously the language of the protocols would be amended to reflect that? Okay. Michael?

[00:17:29] Michael: Thanks. Question now. We have to revisit this issue again tomorrow. Would that negate all the work we've done for the rest of the afternoon? I would suspect yes.

[00:17:41] Facilitator: I would open that up to the department and to the working group. From my facilitator standpoint, we would be working under valid protocols at the time. I would say no. However, I'm open to being corrected if I'm wrong.

[00:18:03] Member 6: I would just suggest that that's a risk worth taking.

[laughter]

[00:18:11] Member 6: That was only a question.

[00:18:14] Facilitator: Does anyone here in the working group or the department have an affirmative or clear answer to Michael's question before we take Aaron's approach of risk-worth-taking and [unintelligible 00:18:25]?



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[00:18:27] Member 3: Our view point is that we will be operating under protocols that we've all agreed to. We can agree to reopen just that issue if we want to solidify what we've done already that we're not revisiting the entire protocol if that's something that the committee would like to vote on. You can certainly make a recommendation to do that. From our perspective, if we are operating at this time and continue forward, we have a set of protocols in place and we're able to continue our business.

[silence]

[00:19:09] Facilitator: Any questions or comments before we take a vote?

[00:19:16] Michael: Can we just get some clarification on whether or not the summary record of today will reflect the point of some folks [unintelligible 00:19:26] and some are not?

[00:19:29] Facilitator: From a facilitator standpoint, when we do draft the initial take on that, yes, we can comment. We certainly will be polishing it a bit.

[laughter]

[00:19:39] Facilitator: Based on the amount of time we started talking today. Obviously, we only distribute a draft of the summary. We do share with that for working group and then accept comments on that before there is a final summary. Yes, the summary can reflect that, and I will make sure the three of us has that written down in the minutes. Let's take a formal vote on the protocols as they are, pending the department's investigation into the availability of an audio recording, which we're hoping we can get tomorrow morning, and with the ability to reopen 5E. If we do not have the option to have an audio recording, and the understanding that any work we complete in the interim will be under accepted protocols and will not be lost.

That's a lot to consider. Let's see a formal show of thumbs. This is a formal vote, I do not see any thumbs down, but I will ask for verbal feedback. Is there anyone that opposes this vote? I'm not hearing any. I would like to congratulate the group.

[laughter]

[00:21:10] Facilitator: We have protocols that we need to work under for the rest of the day. We will await the department's to start on the investigation. At this point, we have important business to attend to. Let's first talk about the petition for membership which we're going to turn over to the department and then we can talk about the additional issues as well.

[00:21:34] Anne Marie: I think it would be helpful if person who had petitioned for membership would come back and restate his name and affiliation and had-- Because it's been so long I just want to-- But I think it would be helpful if we could refamiliarize everybody on this committee. So that they're very clear about what they're voting on. Again, I thank you all for your patience.



7

[00:21:53] Mr. Anderson: Thank you. My name is Dr. Rob Anderson. I'm the president for the State Higher Education Executive Officers Association, newly elected president. I represent the state systems throughout the 50 states, as well as DC and Puerto Rico. Our mission, our objective is more access and success with our students with the most time efficient, cost efficient, manner as possible. My executive committee wants that perspective represented here.

We are not non-partisan, representing all 50 states and beyond in that fashion. I know that I would have a lot from this body to take back to them for consideration, depending on the state government structure, some are just public, some include private. A lot of oversight of actively programming and the quality of that program as well as oversight for financial aid. I think we'd be an important voice for this discussion, and I really appreciate your consideration.

[00:22:49] Anne Marie: If I can just remind everyone that State Higher Education Executive Officers is a constituency that we had outlined in the original Federal Register. We did not yield a primary or an alternate for that category, so at this point that seat is completely vacant. Mr. Anderson would be at this point in the primary role, and I don't know if there's anyone else who'd like to nominate for the alternate role, it did not seem that way. Mr. Anderson, would you agree to be, in a sense you're primary and alternate for this role, if chosen?

[00:23:24] Mr. Anderson: Absolutely. I'm very [unintelligible 00:23:26].

[laughter]

[00:23:29] Facilitator: Are there any questions for Mr. Anderson before we take a vote? I'm hearing none. Can we see a show thumbs on including Mr. Anderson as a working group member? For the record, I see all thumbs up. We will have to get you a name tag.

[00:23:55] Anne Marie: We could get this ready. I know some of the names that I have as well as the set of issued papers. The team back there should be able to get that ready for you. [crosstalk]

[00:24:03] Facilitator: You're already in your seat. [crosstalk]

[00:24:05] Mr. Anderson: Okay. I'm thinking about that, actually.

[laughter]

[00:24:07] Facilitator: That's a lot. Now that we're making progress as a working group, I think we need to move on to the discussion of additional issues we had. Actually, do you have a comment? I can see you're raising [unintelligible 00:24:22].

[00:24:25] Member 2: Sorry. This is probably the time to recommend members for the final vote [inaudible 00:24:31]

[00:24:34] Facilitator: Yes. [unintelligible 00:24:34].



8

[00:24:36] Member 2: I have a recommendation for the department to have to be here to [inaudible 00:24:43] ?

[00:24:44] Anne Marie: We would want them to be able to confirm that they're willing to serve.

[00:24:48] Member 2: Okay. They need to be here [unintelligible 00:24:50].

[00:24:53] Anne Marie: They need to be here. The other option again is that you could recommend it at a later time. If the committee would agree to hear that agenda item at a later date.

[00:25:06] Member 2: I'd like to recommend [inaudible 00:25:07] tomorrow.

[00:25:13] Facilitator: Yes, but if the individual would be available during this first set of meetings.

[00:25:20] Member 2: For the financial responsibility sub-committee, yes they will be available.

[00:25:25] Member 4: It's on you [unintelligible 00:25:28]. Just for clarification purposes, I know before we spoke about an open sub-committee, and I don't think it was clear if we need a Federal Register notice for that process or-- I just wanted some clarification on it.

[00:25:48] Facilitator: Just from a facilitator's standpoint, not that the question doesn't need to be answered, but if we agreed to at least in the interim as the sub-committee meeting being closed, but we will hear a response to the question.

[00:26:05] Anne Marie: I'm sorry. Can you restate your question?

[00:26:10] Member 4: Before we broke the meeting we spoke about an open sub-committee and that we need a federal response that more- maybe we'd like to talk. I need a federal registered notice and additionally hear the federal register case that states on page 94 that the committee may create sub-committees [unintelligible 00:26:32]. Then on 95 it adds, as part of the facilitator's rules, position, and process, we are forming a financial responsibilities sub-committee. Then the last part [unintelligible 00:26:46].

[00:26:52] Anne Marie: If I misunderstood your questions, please let me know. We created the financial responsibility sub-committee in the anticipation of that need. We formed the first sub-committee. When it talks about the committee being able to create sub-committees, that would be in addition to the one that we've already created. At this point, we've determined that--

In the Federal Register, we published that the financial responsibility sub-committee will be closed to the public, and that's part of what we've just voted on. We didn't have to investigate whether we may need to work with another federal register notice. We



9

did already say that that specific sub-committee would not be public. Given that we just voted, I think a lot of us up here we thought that one was resolved.

[00:27:50] Facilitator: The request on the table from Ashley was to have the ability over the next 2.1 days we have left to bring a proposal of someone, officially for someone we added to the sub-committee. Does the working group have any objection to that? Michael?

[00:28:13] Michael: Not an objection, it's a question. It appears to me that the list of communities interest that was put forward to me in the federal register [unintelligible 00:28:25]. Ashley, is what you're asking for an additional constituent or additional community interest, or another individual bill, another spot on the bill? [unintelligible 00:28:42] put forward.

[00:28:46] Anne Marie: I actually understand it.

[00:28:48] Facilitator: Just for my clarification, from the facilitator's perspective, was your proposal to be able to nominate someone to this committee or to the financial responsibilities sub-committee?

[00:29:01] Member 2: Just the financial responsibilities subcommittee. It could be an additional item [unintelligible 00:29:12] question to this committee having heard more about how that committee technically will function today. I think it would be great to have some additional voice in there, and [unintelligible 00:29:25] then with recommendations in a public and a non-public space. We could then be [unintelligible 00:29:32]. For that [unintelligible 00:29:40] category it would be [unintelligible 00:29:41] now.

[00:29:47] Michael: You're requesting an additional community and just to be added?

[00:29:50] Member 2: Yes.

[00:30:00] Member 3: For the committee, so the community would have the ability to go with the sub-committee. So are you recommending something that has a different skill set, then if you want to talk about the [unintelligible 00:30:10] ?

[00:30:11] Member 2: Yes.

[00:30:16] Anne Marie: So individual clarity, you do understand that [unintelligible 00:30:23]

[00:30:25] Member 2: Yes.

[00:30:29] Facilitator: And I understand the proposal, at least at this point is not clearly at any specific individual, except the ability if that individual is present in the next few days to [unintelligible 00:30:43] that [unintelligible 00:30:43] for the individual [unintelligible 00:30:47] correct?

[00:30:47] Member 2: Yes.



10

[00:30:47] Facilitator: It's to keep the door open.

[00:30:48] Member 2: It's to keep the door open just that I could review [unintelligible 00:30:50] tomorrow instead of the department to be here to vote on the [unintelligible 00:30:56] .

[00:31:03] Facilitator: And just from a facilitator's note, I would say, I think that person like Mr. Anderson would make a statement of why he or she felt that should be on the committee and to participate. I think in the form of the working group. Are there any questions at this time from the working group before we take on that?

So let's see a show of hands or a show of thumbs on keeping the door open, so again formally, actually for- or other working group members during the next two days, we're limited to two days to be able to petition to have an additional member on the financial responsibility, sub-committee, if the working group accepts at that time. Show of votes?

Okay, I do not see any thumbs down at this point, and that's a formal vote, that we'll consider that door still open to actually, or any other working group member vote for the next few days. We'll consider petitions when they arise. We'll put some time on the agenda and check with each of the working group members before we start [unintlligible 00:32:27] to that. That being said, we know we have to check with Ashley if someone else has a recommended decision, [unintelligible 00:32:36] just so we can allocate time.

Any other issue pertaining to [unintelligible 00:32:44] ? Let's get back to reviewing and building an agenda for the rest of the day and for the next few days. I believe, Anne Marie, you had feedback on today's earlier conversation?

[00:33:01] Anne Marie: We're willing to hear a little more detail about the issues that Wanda had with the [unintelligible 00:33:05] . I think we have some discussions that might help to create a framework around that. The first issue that Wanda had mentioned was related to public [unintelligible 00:33:15] discharge.

We'll certainly let Wanda explain her proposal in more detail, but it sounded like from what we heard that the issue that she's bringing up was about requirements to sending out applications, and that was something from the 2016 regulations that has not gone into effect.

If that is the case, then our feeling is that it's not something that we need to formally add to the agenda because it's not something that can necessarily occur, that we would certainly consider if that's something that we want to do as a committee, and if it is, then we can certainly correct anything as we write it to you, but that we wouldn't necessarily needed to do a technical correction because it's not an issue currently in place.



11

[00:34:12] Member 5: Am I correct in my understanding that because there is already that is [unintelligible 00:34:20] discharges on the agenda that Wanda has point of concern technically is the one concerned [unintelligible 00:34:27] ?

[00:34:29] Anne Marie: That's correct.

[00:34:34] Facilitator: Okay. So to return the ball to Wanda here. I believe you [unintelligible 00:34:40] like five potential options in that versus one, so we have four remaining. Could we quickly review what those were, and I listen to feedback from the working group.

[00:34:54] Wanda: I did email that to everybody that a [inaudible 00:35:00] I did email the that to everybody, that the defining what changes can we [unintelligible 00:35:08]. We're just going to have to do an inquiry for them to collect [unintelligible 00:35:13] program information. And that the regulatory response [unintelligible 00:35:18] which is that coordination [unintelligible 00:35:22] . \

The issue is that if that [unintelligible 00:35:28] which is you retain your idea or your pay [unintelligible 00:35:33] you can provide incomplete, missing, or untimely information that could have any [unintelligible 00:35:41] unnecessary interest capitalization.

What that means is that the [unintelligible 00:35:49] the people working from when they move to what we call [unintelligible 00:35:54]. Which is the payment they would be paid if they were to be rescheduled. If there's been at least [unintelligible 00:36:03] at that time where they just want to be capitalized. What we would want to do is expand the resolution that would expand the conditions for the users to be administering [unintelligible 00:36:17] to include a collection of processes and conditions for the certification.

[unintelligible 00:36:21] is not capitalized at the end of the [unintelligible 00:36:31] but then it may be if [unintelligible 00:36:35] period before it occurs after the [unintelligible 00:36:41] period.

[00:36:43] Facilitator: Thank you. I caught most of that as the facilitator, but I'm sure the working group has a better understanding of the respective issues. The question on the table is obviously not to accept or decline the proposal, it is whether this is something that should be added to the agenda for the working group, on top the eight items we already know.

Or whether the working group feels that fits under a current item. Any comments from the working group on that issue?

[00:37:18] Member 1: [unintelligible 00:37:19] could you update on- I believe you've already said provide [unintelligible 00:37:24] or you said untimely? Could you update that to say untimely because it says other than timely?

[00:37:33] Wanda: Is that the record [unintelligible 00:37:34]. [crosstalk]



12

[00:37:34] Member 1: I just wanted to make sure I understood you correctly.

[00:37:42] Facilitator: From a working group, is this something that the working group feels we should add to the agenda?

[00:37:57] Member 6: I just had a procedural question. If we can add things as we add things, we have to reach a consensus on all of those things to reach consensus on everything? I want to be clear. The stakes here are we put too much on the agenda theoretically. I'm in the impression and just want to make sure we understand we could not be able to get through it all in this [unintelligible 00:38:18].

[00:38:23] Facilitator: I am assessing some affirmative body language to vote.

[00:38:29] Member 2: I just have a quick question. Could you tell us exactly how this ties to our understanding [unintelligible 00:38:33]. This is an opportunity for us to [unintelligible 00:38:40]?

[00:38:54] Facilitator: Any feedback from the working group? Yea or nay? Let's see a show of thumbs on including this as an additional issue. I see a thumbs down. Anne Marie, could you provide your perspective?

[00:39:18] Anne Marie: First our concern is that this is not part of our- and that we don't want to dedicate the resources at this time to something that could sidetrack us away from the eight other issue papers that we have. Our concern is that we want to get to consensus and we don't want anything to get in the way of that. We don't want to add on a lot of other small issues that can sidetrack our conversation.

We already are most of away from the first day, and that's where we are really concerned. We also think that there might be other ways since these appear to be technical corrections to get things done more quickly. It does not necessarily have to be part of this negotiation session.

[00:40:04] Facilitator: I saw some affirmative body-language from the group and from Wanda. [unintelligible 00:40:08]

[laughter]

[00:40:13] Wanda: We understand that.[inaudible 00:40:15] We understood that, and that might be the response to say, and then we move [unintelligible 00:40:25] . It's not important, but it [inaudible 00:40:28]

[00:40:34] Facilitator: No, I would assume that the-- My assumption is- I'm happy to be corrected by anyone in the working group- the response would be the same in relation to all. [unintelligible 00:4047] if I'm correct.

[00:40:50] Anne Marie: That's correct.

[00:40:51] Facilitator: Okay. Is the working group okay for the purposes of this discussion rejecting those proposals as additional options for discussion? They will



13

be noted in the meeting somewhere as issues that were brought up, and the comments that were just part made them, especially, in other words, addressing these issues would be included in the meeting summary as well. Is the working group comfortable, moving on and saying, "No new proposals as far as they've been discussed at this time will be added?"

[00:41:26] Member 5: Do we have to be comfortable-

[laughter]

[00:41:31] Member 5: -because we add issues by consensus, then we won't have consensus, meaning, we can say we're comfortable, but I'm not sure what that gives us other than [unintelligible 00:41:46].

[00:41:48] Facilitator: Yes, to respond to that question then, I think-- I was using the "are we comfortable" statement to apply to all of the other three issues as well, rather than taking a consensus vote on each one individually. I will formalize it and make it more clear. Can we take a vote on addressing the eight issues as presented and not adding new issues at this time to the working group's agenda? Could we see a show of thumbs on that? I see no thumbs down, so we do have consensus on not adding additional issues.

As discussed, we will incorporate those with the comments and the suggestions into the meeting summary. We have been taking notes obviously, but we would appreciate working through your feedback and making sure we understand those proposals and have them accurately reflected in the summary. With that, I think we can move on. The next item for discussion if there're no other comments is to begin discussion of the actual issues.

I would recommend that we start with issue one and work through unless there's any alternative [unintelligible 00:43:14] by the working group. Okay, hearing none, I will turn them over to Anne Marie. If you could kind of open up the discussion as issue number one for us.

[00:43:27] Anne Marie: Issues number one is whether to establish a federal standard for the purpose of determining if the bar witness establish the defense for the repayment of a loan, based on an actual admittance of the institution. We've listed out for you statutory and regulatory sites. We've already talked earlier this morning, again, this afternoon about we are considering our starting point to be the 1994 regulations. These regulations will clarify the notice of the interpretation the following year in 1995.

When we talk about the current [unintelligible 00:44:01] regulations, we are talking about those. Current regulations talk about having a standard that requires the borrower to establish the existence of an actual admission by the institution that would be advise the cause of action against the [unintelligible 00:44:16] they were applicable state law.



14

As we talk through this issue, we'll talk about what an applicable state law is, and why that has complicated issues such as whether the borrower is a resident of the state, where he or she is attending school. Whether the school has additional locations, and what does that make for declaring what state governs this conduct. There are numerous issues such as that. Again, we'll have discussion about those.

We're talking here about the idea of conduct that is directly related to the loan, the issue, the idea, the educational services provided. Not some of the other issues that might have come up, if somebody has a slip and fall on campus, that's not a reason for defense to retain them. Again, we will talk about all this in more detail, but we just kind of wanted to shape this [unintelligible 00:45:12] We're currently are evaluating claims under this point. We are looking at those regulations as our beginning and not amending on a language per se.

That's not to say that you can't propose something that is contained within the regulations, but reminding you that our point in being here today is to do something different. We are asking you to come with open mind [unintelligible 00:45:37] about what might be possible, about what we might have missed in the past. We also want to clarify that higher education access direct to secretary issue regulations [inaudible 00:45:50] .

Talking about us classifying which acts or omissions would be something to allow our [unintelligible 00:45:58] to assert a defense or an opinion, and when a [unintelligible 00:46:03] can recover funds from the secretary. We do want to point out that we still get significant conversation in the past from inside and outside of our negotiation, we're making process that the statutory language does state that the amounts can exceed the amount that the borrower had repaid on their loans.

We are not talking about the idea of adding extra money for damages on any [unintelligible 00:46:29] . I think that's important to know right up front. What we're looking at in terms of what we actually forgive is how much the borrower had, not so much how much damage they could prove that they received.

So then we started to questions that we want the committee to consider and to think that these are lengthy enough that we really need to take care of any one issue [inaudible 00:46:53] . The first point of consideration is whether the department should establish a uniform or what we think of as a federal standard as opposed to a [unintelligible 00:47:04] standard for evaluating borrowed [unintelligible 00:47:06]

Also reminding people that this could be perspective as governed by the promissory note. We would set the date and say that when the regulations become in effect, that would be the starting point for our first dispersed owner [unintelligible 00:47:23] and then we would accept that the future not looking backwards.

[silence]

[00:47:39] Member 4: The [unintelligible 00:47:43] investigation in this regard to a second or third [unintelligible 00:47:49] to our defense we change had



15

[unintelligible 00:47:56]. I appreciate that there has been a change in implementation difference to the policy orientation, that's one. [inaudible 00:48:05] newly adopted federal regulation. I understand the effective date had not kicked in as a result [unintelligible 00:48:14] federal law until January this year. [unintelligible 00:48:23] process.

It would be helpful to apply specifically what goes in the scheme of [unintelligible 00:48:37] so that it ought to be mitigated [unintelligible 00:48:40] . I just don't understand why the official record or the primary process that led to the adoption of federal law [unintelligible 00:48:51] If they should be just raised for example [unintelligible 00:49:00] I think it would be helpful to [unintelligible 00:49:02] communication for the [unintelligible 00:49:06] to know that.

It's not because the sufficient amount [unintelligible 00:49:09] . It would be helpful to know how they were bad. Specifically, what provisions will the department on [unintelligible 00:49:18] and whether they would see that rejected specific [unintelligible 00:49:23]

[silence]

[00:49:44] Anne Marie: We appreciate your question, and I appreciate the opportunity to try to shape our conversation. Unfortunately, because we do have litigation challenging of the regulations, as well as the delay of those regulations, I'm going to comment this time on and the specifics of thinking of the particular piece of regulation that we have to see changed. I think that we made a determination that we should go forward and having this discussion and having this session and negotiating again, so I think that we need to do that.

Unfortunately, I won't be able to limit the parameters in any way other than to say that we've put everything, and we've put these issue papers out there very specifically with the idea of putting it all back on the table and seeing what we've come up with.

[00:50:34] Facilitator: We had covered up [unintelligible 00:50:37]

[00:50:43] Member 1: I think we all knew when we came here that we were starting from scratch. If we start from the presumption of the rule is going to be rescinded, I'm not sure of the legality to that, but I also believe that we're then assuming that everyone on this committee agrees with that as a starting point. That's not what we agreed upon when we came here. We agreed to start from scratch and that's where we should start from.

[00:51:08] Member 3: I'd just love to clarify that also is one of the idea that will have rescind it and [unintelligible 00:51:14] provided we're going to adopt [unintelligible 00:51:17] rule. Even if that can't happen right now, it would be nice to know what the factual basis of [unintelligible 00:51:24] certainly is. Understanding that the abilities or just do different things that are exposed to [unintelligible 00:51:31].



16

[00:51:43] Anne Marie: Again, I think because that is the main point of a [unintelligible 00:51:48] formal lawsuit, we are unable to comment on that. As far as we're concerned, the starting point is the 1994 Regulations.

[00:51:56] Member 2: [unintelligible 00:51:57] 50 minutes left? You have 49 minutes left. Just in the interest of understanding at least some of the interests around this first issue, and we have some comments, responses, on the first question [inaudible 00:52:18].

[00:52:26] Member 1: The first question on issue one asked about whether they'd be a federal standard approach to a standard based on state law. My comment would be, I don't [inaudible 00:52:38] this has to be either/or. The prior rule making, several of the non-federal negotiators proposed the establishment of a federal standard that serves as a floor or a minimum requirement, to provide consumer safeguards to borrowers and states that have less [inaudible 00:52:55] but that would still continue to prevent borrowers to [unintelligible 00:53:02] forward and [unintelligible 00:53:03] existing state consumer protections as well.

[00:53:13] Member 5: [unintelligible 00:53:15] would respond to that because, I view, specifically, our position in that consumer protection laws are a matter traditionally reserved for the states. They're an area in which the states have legislated and litigated extensively. State law has been relatively accepted as governing and policing legal contracting process in general. We would have real concerns with the department establishing a federal standard.

The primary concern of most of these borrowers would be [unintelligible 00:53:45] debt. If there's a standard federal standard established, I think for most people that becomes the baseline standard, which in the end doesn't serve the interests of students because many actors will not be pursued by state attorneys.

[unintelligible 00:53:59] circumstances, we don't want it to come here, so we would have real reservations about the United States government trying to set a floor [inaudible 00:54:08].

[00:54:19] Member 2: I'm sorry, could you clarify more about what you're saying about how we have an issue of our working class? [unintelligible 00:54:28] issue is about having federal [unintelligible 00:54:29] at all? Or [unintelligible 00:54:31].

[00:54:32] Member 5: We've have an issue with both. We could argue that state law should apply to these circumstances and so it would be adequate to apply in these circumstances. The hybrid approach that has been proposed of minimum state standard and letting states to choose to regulate through switching the contractor more aggressively, allowing states to choose more than the federal standard [background conversation]

[00:55:13] Facilitator: [unintelligible 00:55:14] and again we are here, we are discussing proposals [unintelligible 00:55:22] We are here to collect information and to understand interests.



17

[00:55:27] Member 5: I'm a little confused [unintelligible 00:55:31] it's not an issue in on itself, but [unintelligible 00:55:34] a contractual relationship between the department and an individual, and we're talking about the basis upon which the department could determine to forgive the contractual obligation of the student to the department. That does not preempt or obviate the ability of the student [unintelligible 00:55:55] under state law. I don't think it's unusual for one or two contracting parties to have the right to forgive the debt owed by the other party under the contract. I just don't understand the state law preemption connection.

I think there are two responses to that. The first is that, while it's true that these are rules that are trying to govern a contractual relationship between the department [unintelligible 00:56:26] it's doing so on the basis of the conduct of the third party. It's establishing standards that are intended to regulate the behavior of that third party. So it is an attempt to use that contractual relationship between a borrower and the United States government to regulate the actions of actors who would normally be under the jurisdiction of the state.

The second is, if I were the borrower [inaudible 00:56:47] The borrower is primarily concerned about the expense they've incurred in the debt, rather than addressing their grievances in significant number of cases. Once that individual has been able to obtain some [unintelligible 00:57:03] from the obligation to repay [unintelligible 00:57:06] Which is a real loss to those borrowers who are not aware of this process, who may not be able to avail themselves [unintelligible 00:57:20]

[00:57:35] Facilitator: Just in terms of, has the department looked at or studied the outcomes of whether or not from efficiency standpoint and from the ability to deal effectively and really process the point where there is a distinction or there is a difference whether you go with federal standards or you go with individual state standards. Again, just look at how quickly those can be processed so that the student's not waiting for a very long time. Where do you [unintelligible 00:58:07]

[00:58:10] Anne Marie: Unfortunately our research is a little limited on that, but what we considered is that it would seem easier to some extent to have a federal standard so that we're not trying to interpret 50 state laws plus territories. I think that we already know we're going to have to look at state standards for a very long time. We have all of the loans that are currently being made today, they are all subject to a state based standard and so those loans will be implicated for many years. If we get to the point where we decide federal standards is the way to go, again, that would be prospectively only, so we will have a long time to do some niche, and we understand that that's part of this.

Those loans are in the past, looking in that sense, and they will be [unintelligible 00:59:05] We want to do what we think as a committee is best going forward. We think that it will be the simpler process to look at federal [unintelligible 00:59:14] and federal standards, because then it's one uniform standard. It's a federal program and so that might be one of the things that there should be a federal standard for that, so that students in one state wouldn't have an advantage over students in another state.



18

But again, this is all for discussion and we want to be informed by your viewpoints of it, not just your [unintelligible 00:59:35]

[00:59:41] ?Member: [unintelligible 00:59:43] It would seem that it would give them an easier benchmark or an easier way to figure out if they could or would qualify for this. Regardless of what state they were in and also regardless of what school that they might be. It's not only what they certainly could with different students, different advantages, and different environments become a different area on the city jurisdiction. It also would [unintelligible 01:00:11] into schools. It's something to think about it. I think it would be simpler for everyone if there was just one [unintelligible 01:00:19]. There are concerns [unintelligible 01:00:30]. That was the group people.

[01:00:45] Member 5: I thought you asked us not to repeat whatever [unintelligible 01:00:46].

[laughter]

[01:00:49] Facilitator: I'm happy to repeat.

[01:00:50] ?Member: Thank you for [unintelligible 01:00:50]. For those of us that aren't attorneys around the table, the problem doesn't go out with conversation and a couple of you in layman's terms [unintelligible 01:01:02] disadvantaged to report to an institution if they found your standard wasn't [unintelligible 01:01:08] approach the state senate.

[01:01:17] ?Member: I think protecting a huge point. There's a disadvantage to everyone in the country when the constitution's not accepted. I don't mean it's non-dismissive that way, we have got our arguments have really been [unintelligible 01:01:29]. These are matters that are observed in the States to regulate. We understand that there's a federal relationship here, we also understand that the federal relationship shouldn't be allowed to grant the federal government the ability to regulate things that are observed in the states.

I do think that there's a harm of students in the end of it if these much more developed, much more hyper-state volume solutions that can address much more [unintelligible 01:01:56] abuses are [unintelligible 01:01:57]

[01:02:07] Facilitator: Is there a question-- Does the state of Texas question the authority of the department to establish a federal opinion or you're expressing an opinion that is undesirable?

[01:02:25] ?Member: I'm primarily expressing an opinion as undesirable. I'm not sure that it [unintelligible 01:02:29] as a whole. Now, it is constitutionally barred, but we do think that runs current contrary to the constitutional design for having to regulate or how this kind of contract will be regulated [unintelligible 01:02:41].

[01:02:47] Facilitator: I heard you say a moment ago that regulating the behavior of third-parties that are already regulated by the state or something like that. In this



19

context, remember the oversight is not just the state but it's also the credit union agencies, and it's also [unintelligible 01:03:10]. As you said, these are national programs administered centrally by the federal government and the contractual arrangements are between individual borrowers and essentially the US treasury.

Certainly, when you suggested what is owed in other circumstances. Again, you just said [unintelligible 01:03:48] a federal program with federal interests that generally, unless otherwise specified, is also [unintelligible 01:03:59]

[01:04:05] ?Member: I appreciate John's point about the important role that the state attorney general of the state play in protecting the students and developing and enforcing a consumer protection laws that apply to the higher education industry. I'm based in Boston, in Massachusetts. The attorney general there, for example, was actively involved in creating new regulations that clarify what schools can and cannot do when recruiting students. That provides a lot clarity to all government parties and have been pretty effective in helping black students from being taken advantage of or scammed. Those are examples of really important things that the states have been, and I hope should continue to do.

Because schools, when they operate in the state of [unintelligible 01:05:05] are required to comply with state consumer protection laws in that state, continuing to allow borrower advances based on state consumer protection laws makes sense to me, that if this school should already be acting in accordance with those laws. So they already know the standards and should be acting consistent with them, and to the extent their breaking the law, it seems to make sense to me that that student should be able to get relief when they had their rights violated.

Like I said, I maintain very much in favor of continuing to allow our defenses to be brought on behalf on the basic of the state law violation. I don't think to that at all is inconsistent, but also having a federal standard as the the floor however, so I'm seeing [unintelligible 01:05:53] very active in this area and have done a lot to put up their students. So the states had [unintelligible 01:06:00] in their priority. They had it then, very involved in it and I don't think that the students in those states should [unintelligible 01:06:05] scam should be stuck with federal student loans, just because they are unlucky and living in a state that hasn't brought further interests.

[01:06:18] Anne Marie: Ashley then Kate.

[01:06:22] Ashley: Because I'm also not aware, and we're talking about applicable state law. For those of us that have students in an online environment, is that the state in which they are located or is it the state where their school is located? What happens when they move?

[01:06:42] ?Member: To give a lawyer's answer, that's probably dependent on the circumstances.

[laughter]



20

It depends on the choice of [unintelligible 01:06:50] in various states as well.

[01:06:53] Ashley: Does that mean, to be in the discussion, I guess, for us, does that need to be clarified here what we mean by federal state law?

[01:07:05] ?Member: We do think it would be very helpful if [unintelligible 01:07:08]

[01:07:16] Speaker 9: Is there a response to that [unintelligible 01:07:18] I have to [unintelligible 01:07:26] questions to you, perhaps the department could tell us about how you're addressing it with the current [unintelligible 01:07:36] anything that define regulations and [inaudible 01:07:37]

[01:07:41] Anne Marie: I think again, the answer to this is the cause of this is saying it depends. I think that we'are looking at a variety of situations and there are times where state laws do state that there is a priority in terms of what expressions over what, and again, [unintelligible 01:07:57] would say-- I've heard that there are various things we looked at as the plane comes forward. That's part of the reason that some of the claims have taken so long, is because the thing about doing analysis of which state is the correct state here. I think that was one of the reasons that we put forth, again, the idea of, should we do a federal standards, so the [unintelligible 01:08:17] comes less of an issue for us.

[01:08:21] Facilitator: So that is from the facilitators perspective. I think, what I hear is, there is no further answer to that question unless you have a specific instance that you could evaluate, and depending on the circumstances of that instance [unintelligible 01:08:37]

[01:08:45] Anne Marie: Then, Ashley and then, Aaron.

[01:08:50] Speaker 8: My comment was really about, if there's no federal standard, no minimum, then, what happens to [inaudible 01:08:55]

[01:09:12] ?Member: My comment just would echo that. I think we should give students every path to [unintelligible 01:09:16] where it would take a long time to build a case, or something like that, where they need to have a federal [unintelligible 01:09:30] which help in [unintelligible 01:09:31] Also, do that thing to be able to litigate, to [unintelligible 01:09:41] interact with.

[01:09:54] Facilitator: A question just for John [unintelligible 01:09:55] that you're concerned about a federal standard. I appreciate you articulating that. What just would be great, because I think I understand [unintelligible 01:10:05] talking about either the core. You [unintelligible 01:10:08] core process [unintelligible 01:10:09]. My question to you is just, to clarify what your proposal would be. Just the city trying to stake all violation that occurred or how exactly your thinking would have worked.

[01:10:25] ?Member: I actually think that the current regulatory framework for our decisions would show that they would have cause of action under state law, recognizing that that will vary. In recognizing the challenge [unintelligible 01:10:34]



21

department. Our response to that is, we understand that the federal government has its significant interests here and significant [unintelligible 01:10:44].

[01:10:50] Facilitator: Just as a thought, because I want to make sure I understand. You suggested a federal court plus a violation. Which suggested to me, maybe I'm misunderstanding, but it suggests someone actually showing up with a judgment. You seem to be suggesting that someone could allege that there has been a violation of state law. Then the department would be stepping in and making the determination as to whether or not there might have been a violation [unintelligible 01:11:14] without an actual judgment. There's obviously big differences. I just want to make sure I understand, because of the proposal.

[01:11:21] ?Member: If I may that, I didn't understand that as being the proposal we talked about. The proposal that was discussed in the previous negotiated rulemaking was for the federal government would establish a minimum standard for discharge. But if state law provided a standard higher than that, that standard whether discharged, would be obtained within situations for the federal standard wouldn't provide a discharge that the state law could still be [unintelligible 01:11:48].

[01:11:55] Facilitator: I'm happy to be corrected. Under 94, we're calling for the current framework. It's if there's a violation to get addressed to a cause of action in the state law. It doesn't have to be a judgment. Whether or not the department would interpret whatever the alleged facts are [unintelligible 01:12:10] interaction of the state law. I believe under last year's framework, it was an either or scenario. You could show up and you could say, "I have a judgment in hand. Something actually occurred at the state." Or there was a breach of contract, or there was a misrepresentation under a federal scenario. Is that accurate?

[01:12:26] ?Member: I think that's accurate as to what [unintelligible 01:12:31] with the department finalized in 2016. My proposal and the legal assistance committee proposal at that time was a true hybrid, where there'd be a federal standard that operates as a quora, as we discussed. The fact that we would continue to maintain that provision allowed for borrowers to prove, defense case on conducts that could give rise to a state prospect without requiring a final judgment. As the lawyers at the-- I don't know. Final judgments are extremely rare in a legal system, where it's difficult to get to a final judgment, and both parties benefit from federal law falling apart earlier.

[01:13:27] Speaker 9: Michael, did you want--?

[01:13:31] Michael: I'll just add one thing [unintelligible 01:13:33] We, and the accreditation community, also thought that [unintelligible 01:13:39] amongst the [unintelligible 01:13:42] feature and oversight requirements amongst the states. What is the locus of responsibility and the oversight? Is it that the state law tools located [unintelligible 01:13:52]. I see a need of the usefulness certainly of having something like that that creates this provision and fairness for students who are on the [unintelligible 01:14:02]. Then it is an important point.



22

The language and the regulation in understanding specifically the distinctions that folks are talking about around the table, about the differences between what gives rise to a cause of action as opposed to a determination of judgment. Again, from accreditation perspective, we do see settlements at the state level, and they sometimes we'll be very frustrated that we don't have a judgment with regard to that. Because specifically in the settlements process, nobody wants arraign, nobody takes any responsibility for what happened, but somebody has paid $30 million. Which tends to be [unintelligible 01:14:49].

This makes it very difficult to take action when we don't have a finding of a violation of law or regulation. At least keeping involved in the standard of getting by with some determination. I'll talk about it, member representation [unintelligible 01:15:15].

[laughter]

[01:15:20] Speaker 9: Yes, go for it.

[01:15:27] ?Member: Just to quickly in response to that, et cetera. As an agency that litigates things everyday, we certainly understand the high burden of a judgement. I think I would say in that position that a judgement is necessary. The second, is that [unintelligible 01:15:44]. It's rare that I get the chance to safeguard my [unintelligible 01:15:49]. I understand the attorney's general valid point in Massachusetts [unintelligible 01:15:53].

[laughter]

[01:15:59] Speaker 9: We have [unintelligible 01:16:01] In the meantime, move on to the second question, second bullet.

[01:16:07] Speaker 11: I'll take it. Can I just--

[01:16:09] Speaker 9: Yes.

[01:16:10] Speaker 11: I just wanted to go on record saying this. It's been very popular to identify yourself as not an attorney. I am attorney. I will go on the record as representing institutional risk manager, attorneys requiring officers to say-- I don't have any issue with a judgement, certainly, of any places. I agree that it's hard to come by. I think it is problematic for the department in position of trying to interpret whether or not certain alleged actions get rised under state law, because state laws are complicated and they vary. That's not traditionally the role of the department. I think having a federal standard makes sense.

What exactly that federal standard would be, but I think, one of the things I have to assume that folks are interested in is efficiency and speed of recovery. I think that it's going to be far slower and more complex for the department structure, which state law applies and whether that [inaudible 01:17:12] et cetera. Then to put a federal standard in place and the department to administer on a timely basis. I'd like the idea of judgement plus a federal standard.



23

[01:17:30] Speaker 9: Thank you. Unless, there are any other questions, we can regroup as the first bullet. Let's move on to the seventh.

[01:17:44] Facilitator: Just a reminder, this is your opportunity to share. We're using these first set of meetings, first three days, to really hammer out the protocols and to help in understanding of these issues. [unintelligible 01:17:58] the department is willing to take your perspective, which you share, and put that into language and grasp the way you look at, based on your feedback that you provide here. If you do have a feeling or a thought or an inclination on one of these questions, please share.

[01:18:22] Anne Marie: Our second issue to discuss relates to the basis for the claim of what the department should use, especially to establish a federal standard. What should carry as the basis? Should the definition of this representation like governor of the bar would have said, for payments, correspond to the definition of [unintelligible 01:18:40] departments, or enforce an act after you've given your regulatory cite. There are 34C upon 60C8.71. A number that that outlines some very clear cut items that can be included and can't be included. If you don't use that standard, we want to make sure we were very clear about what we intended to have included. I'll say it again, it doesn't have to be [unintelligible 01:19:04] standard. You might have other ideas, and so we'd like to hear them.

[01:19:15] Member 5: To give some background [unintelligible 01:19:17], if I remember correctly, misrepresentation or substantial misrepresentation are more like 2010 regulations, and I think, were negotiated on the [unintelligible 01:19:30] program integrity-- [crosstalk]

[01:19:32] Anne Marie: It was part of program integrity. It was--

[01:19:35] Member 5: We talked a lot about it at that time, and I think we were quite purposeful around that method which [unintelligible 01:19:41] My only question is, over the last seven years then, in the department you hear about some information data, how many times that the department has found a violation of 66871 Subpart F on either misrepresentation or substantial misrepresentation so we can get a sense of the study. I'm not [unintelligible 01:20:10] on the detail, I'm just-- How often do you [unintelligible 01:20:15] and how often do you study. That would help me understand because that actually serves as effective data.

[01:20:24] Anne Marie: We can do that with cross factoring and see if we can get that data for you.

[01:20:27] Member 5: Thank you.

[01:20:42] Speaker 12: Again, using open your question of what are the procedures that are [unintelligible 01:20:47] cannot be at least a part of this conversation. Sorry, but what if we get to number four. Because the prejudice is the discussion that is yet to take place on issue number three. It's about to enroll additional institutional vulnerability of financial action in this institution. My understanding of the borrower,



24

the defense issue has always been [unintelligible 01:21:17] the process involving the department and the borrower.

The notion that institutions should or should not be underbooked has a consequence of a discharge is yet to be settled here. I don't know why we'll need a new process [unintelligible 01:21:39] for institutional participation. This is not a [unintelligible 01:21:44] discussion, but this for the borrower, [unintelligible 01:21:48] department original claim that this same borrower is sometimes standards that should be investigated. I don't know that due process for the institutions is something that [unintelligible 01:21:59]. Unless, we already settled issue number two. Which is what the [unintelligible 01:22:05] institutions might be [unintelligible 01:22:08] consequence of the borrower [unintelligible 01:22:11].

[01:22:16] Facilitator: Just to [unintelligible 01:22:18]. I think we're still dealing with issue number two. I will note your comment that we should be over four prior to three. We can make that adjustment. I don't know if we will get there today. Any comments on number two?

[01:22:44] Facilitator: I'm sorry.

[background converstion]

[01:22:55] Speaker 9: Comments on bullet two.

[01:22:58] Anne Marie: Erin and then Valerie.

[01:23:02] Erin: We said earlier, that there is a desire to keep this from becoming a [unintelligible 01:23:08] conversation. I would just offer up that, at least, a construct around misrepresentation that was part of the 2016 conversation, and I'm not trying to [unintelligible 01:23:23] on 2016 and that version. I'm just saying, if the question is being asked here, should we use some kind of [unintelligible 01:23:28] misrepresentation [unintelligible 01:23:30]? Of course, what that really means is, are you using that plus the definition of substantial misrepresentation? Because I assume there had to be some tie-in likely to that definition.

Then we can at least question-- I know that we're asked previously which are why is [unintelligible 01:23:48], et cetera. As an attorney, I find that very [unintelligible 01:23:53]. That definition is a [unintelligible 01:23:55] very challenging definition [unintelligible 01:23:59]. When I put it on slides in presentations, people gasp. All of this is to say, understanding that there will be lots of conversation about what the standards should be, I would suggest that we not try to use that but repurpose it for purposes of business. That we explore. It could be another definition of misrepresentation.

That it would be simpler to come up with a single concept that is preferably easy to understand than trying to repurpose the existing definitions of misrepresentation and take into account substantial misrepresentation of clients and all those kinds of things as separate pieces that we're trying to [inaudible 01:24:35].



25

[01:24:36] Anne Marie: Valerie, go, and then Mike.

[01:24:41] Valerie: [unintelligible 01:24:41] that is quite broad as acting [unintelligible 01:24:50]. If we do want to make it clear and more distinct [unintelligible 01:24:56] students in institutions. I don't think that when the department, they discussed it, Acts of Remission and everything else fell into that part, that it's been very difficult and much more confusing and then, looking for more clarity. If we're going to change this language and sort of clarify it, I think that makes sense. To broaden it would become more [unintelligible 01:25:22] we need to be very careful with the language as well.

[01:25:26] Anne Marie: Alissa, did you want to [unintelligible 01:25:27]

[crosstalk]

[laughter]

[01:25:30] Anne Marie: Thank you. Mike.

[01:25:32] Mike: This is from another take, coming from a legal standpoint, just how it relates to the average person, average student. If we weren't to stick with this [unintelligible 01:25:45] misrepresentation definition that is already in previous education regulations. I agree with Erin, that it is extremely convoluted, it's extremely difficult to understand. When you're dealing with an area like education, there's very little jurisprudence on that as it is. Especially, as you're creating new regulations. The common law definition of broad has decades of jurisprudence, which really translates into the student, the person who has a claim, really have a better opportunity to make that claim.

One, just try to find an attorney that's going to be able to understand this. Most attorneys are going to tell a prospective client, "This is so convoluted and so complicated, I'm not even sure that I'm even qualified to take it." Whereas most people understand, most attorneys understand what the common law definition of broad is. I think, we need to make this as-- We need to use what worked, and what jurisprudence has been based on. We've got a history with this, so we know that it works. Trying to create something out of the air is just going to create more uncertainty, and you're going to have these things tied up in court for years.

[01:26:59] Speaker 9: Just to note, you've got five minutes. You're going to take all the comments, so I've printed a couple of comments from groups.

[01:27:12] Anne Marie: Still in bullet two?

[01:27:13] Speaker 9: Yes.

[01:27:16] Speaker 12: I have both a response to the [unintelligible 01:27:22] and a counter-proposal. As someone who is an attorney who represents students with borrowed advances, we'd be strongly opposed to moving to the fraud as a common--



26

Common law fraud as the definition. The definition made it sound simpler, but it is much harder to me. In fact, the department in 2016 said that, "We believe that this sort of standard would render our [unintelligible 01:27:56] for it to move forward. That's due to the asymmetry of information between borrowers and institutions. [unintelligible 01:28:05] required join of intent."

It's very hard for a borrower to be able to figure out what the intent was if someone who misled them gave them incorrect information, but the borrower doesn't know if the person believed that information to be true or did not. They have no way really, of demonstrating that. It made it sound simpler, but it would be, in practice, much harder for borrowers, the meaning, and practically, bar probably. That's the majority of our advance claim, it's just, not because [unintelligible 01:28:35] it's because the bar won't have any way of getting that evidence. I don't think we want to establish a process where they would be taking depositions of school admissions, counselors, in order to get evidence of the intent or that sort of thing.

I think, the standard needs to be realistic about the availability of evidence to students. Let's keep that in mind. In terms of what a federal standard should be, I would propose that the federal standard should be consistent with substantial [unintelligible 01:29:13] that already exists in state and federal law. That it tends to protect consumers from unfair, deceptive, abusive or otherwise, unlawful acts. There are models from the FTC Act, the [unintelligible 01:29:26] Act, that gives instructions of unfair practices that would be unethical, oppressive, unscrupulous. Those sorts of practices are deserving, but I think that we should try to come together to protect borrowers from similarly abusive conduct.

Again, if someone engages in abusive conduct in order to get a student to take out federal loans, that's something that I think that this committee should consider as the basis [unintelligible 01:29:57]. In addition to deceptive conduct, including the types of misinterpretation that we talked about in 2015 while making--

[01:30:11] ?Member: More of a question, and that is, you have already said that the federal store would be helpful especially for a human [unintelligible 01:30:19] but if they wanted to use the department's own definition of misrepresentation, would this be your chance to handle that out better, with being able to with this committee further develop and referring what that actually is.

[01:30:45] Anne Marie: I think this is our opportunity, some gain with [background noise] performing in terms of what we would want to be, that might be in a group saying, [background noise] or a borrower defense, we use a standard or a misrepresentation means X, and you provide definition that is just in this section that pertains to this specific one. That said, you might want to make a proposal that says, "His like to alter the definition of misrepresentation as it currently exist." We're able to just stop sending him at this point. We're here to hear your ideas and take back some suggestions on what you're going to see, and it may be that there are numerous things suggested and will come back and put something on the table that we think might work and we'll react about.



27

[01:31:34] Speaker 8: We've got Brian and then Bill, after that, Beth, and-- [crosstalk]

[01:31:43] Speaker 10: Just to give a little insight, talking about [unintelligible 01:31:47] I mean it really is from a school's perspective and the consumer's perspective, misrepresentation to honor to government standard, did not really [unintelligible 01:31:57] I'd never do that in effect, and jury trying to work between that is balanced. [unintelligible 01:32:06] case would be up to-- the parents convince the government standard, substantial misrepresentation, full version including [unintelligible 01:32:13] In my opinion, something more in [unintelligible 01:32:18] under just with misrepresentation of its signatories as we see here with alliance issue. Substantial misrepresentation, I think strikes a little bit of a balance between the consumer's rate and rates of sole owners or others affected by allegations that are inaccurate.

[01:32:43] Facilitator: Final comment from [unintelligible 01:32:45] There's a lot in there to unpack, we're going to [unintelligible 01:32:48] today, but it's something we can circle back to from [unintelligible 01:32:51]

[01:32:53] Speaker 12: Sure I'll keep this really quick. Just refining that particular with-- so it's in 2016 [unintelligible 01:33:01] that client revisit, the definition of misrepresentation and the 66871, and the department's final 2016 regulations did update that definition to include, not only follow through earlier statements, but also misleading statements that have the tendency for like [unintelligible 01:33:21] to mislead under the circumstances, and also to clarify that pro-missions can also be considered misrepresentation that's under the circumstances, and to the extent that the department, and this rule making wants to consider a federal standard that includes a misrepresentation standard. I would propose that those amendments to the misrepresentation standard maybe 2016 or also maybe that's your liking.

[01:33:52] Anne Marie: [unintelligible 01:33:54] we are approaching the end of our alloted time. We are few minutes to five. We need to build some time to get public comment and so we're going to do that now. Can I have a show of hands as to who would like to make a comment?

[01:34:16] Speaker 9: Just one?

[01:34:17] Speaker 11: I can't take that, it's a process.

[laughter]

[01:34:23] Anne Marie: [unintelligible 01:34:23] If I could just do a very quick house [unintelligible 01:34:24] to-- we do have a new negotiator and so we will be updating the negotiation, that is if anybody has any corrections or edits that they need to make with their card or what's on the printed list. If you could please let Barbara know here on the back, before you leave today, so that we can get that updated for you and give you a new list, thank you.



28

[01:34:50] Jaden: I don't need Ily or the eight minutes that we get, my name is Jaden Alfren, I'm a self employed attorney, sorry?

[01:34:57] Facilitator: Does the mic work? [crosstalk]

[01:35:01] Jaden: Can you can hear me? Practically, I know I'm good. I'm a self-completed attorney and my work on higher education is supported by nonprofit foundations that are concerned with the quality and affordability of higher education. I'll also say before I read this statement that, it is made with all due respect to people here. I know how hard you're working and that you were representing interests that you support.

But I will say this, this proceeding is blocking a regulation that was carefully considered and carefully crafted to protect students and taxpayers from predatory college abuses. What the department is doing now is a bad idea. I've submitted public comments explaining why I believe that. But that's really just the Washington DC way of looking at this, that what's going on is that a rule is getting harmed, a regulation.

From the perspective of those hardworking Americans who've been defrauded and abused by schools who are veterans, who are single mothers, who are immigrants, who are the forgotten Americans that president Trump talked about in his Campaign, this proceeding and this department's failure to act upon 99,000 pending applications for relief, is about something more urgent. Almost all the students seeking relief attended for-profit colleges. Many were left with useless credits and degrees from high price and low-quality programs. They deceived into enrolling and left without careers or salaries that they were promised. Many of them, nonetheless, continue to faithfully pay down their loans every single month, even if that leaves them with little money for things like clothes for their children, food, rent.

This proceeding and the delay in acting on the claim is causing immense hardship and heartbreak for those people. My colleagues and I know these people. We've met over the years and they're good people. All they wanted was a chance to pursue their dreams and make better lives for their families. They're not asking as Secretary DeVos recently said, for free money. They're just asking for reduction in their debt loads so that they can have some chance for a future. But instead of standing with them, Secretary DeVos and his department are now standing with the very people who caused the harm, the people who have pocketed billions and require taxpayer bailout after taxpayer bailout.

There is no sound, public policy rationale or delaying and rewriting the rule. The rule we quickly started saving money for taxpayers by pushing the department to remove from federal aid, those predatory schools that produce the widespread loans, but the issue papers prepared by the department suggests that this meeting is going to be about dismantling those actions for students and taxpayers.

I've been doing this for seven years, working on this issue and I know in respect, many owners and executives of for-profit schools. Some really do want the best for their students and there are many good teachers in this industry. Some others express



29

legitimate concerns during the last rulemaking, probably the last administration, but over eight years, the administration took a lot of those concerns into consideration. I believe we ended up with rules that were more than fair to those schools.

Rules that penalize the bad actors, while rewarding colleges that are actually helping students train for careers. This process today, my opinion is more about the corruption of the process. It's about the blatant desire of some colleges which are associated with political appointees, donors, and friends of this administration to go back to the recent battle days when they could act with impunity, deceiving abusing students in order to maximize profits. Their misconduct, which has led to scores of federal and state law enforcement actions and is still very much ongoing, has been a scandal, and if you do the wrong thing here, it will extend that scandal. State attorneys general, the Democrats and Republicans will continue to fight against fraud in this for-profit college industry.

Responsible members of Congress, media outlets and advocates for students and veterans will continue to expose abuses and more prospective students will get the truth about bad actors in this industry. Even if the Department of Education continues to weaken its enforcement efforts, the lax oversight of the creditors approved sham conversions to nonprofit status and got the accountability rules. The department will be on the wrong side of history, the wrong side of justice and the wrong side of our people. I urge you to keep the existing rule and spend your time in the department helping these students get their lives together and help them to train for careers. I'm glad to answer questions. Thank you.

[01:40:17] Facilitator: I know we only have one hand raised. Any additional public comment? Okay, see you [inaudible 01:40:24] It is 4:59, we promised that we would get you out of here on time.

[crosstalk]

I appreciate the work everyone put into today. I know that even with your--

[01:40:37] [END OF AUDIO]


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1




GROUP,

Plaintiff,

v.




Defendants.

No. 20 Civ. 1414 (LGS)

PRELIMINARY JOINT STATEMENT

OF FACTS

Pursuant to the Court’s June 24, 2020 Order (ECF 36), the parties hereby submit the

following preliminary joint statement of facts, set forth in Paragraphs 1 through 17 herein, in

connection with their cross-motions for summary judgment. In addition, Plaintiff offers the

additional, relevant facts set forth in Paragraphs 18 to 65, to which Defendants do not agree at

this time.

Preliminary Joint Statement of Facts

1. Section 455(h) of the Higher Education Act of 1965, as amended (“HEA”), 20

U.S.C. 1087e(h), requires the Secretary to specify in regulation which acts or omissions of an

institution of higher education a borrower may assert as a defense to repayment of a Direct Loan.

2. The HEA also provides that ED “shall discharge the borrower’s liability on the

loan (including interest and collection fees),” if, among other things, “the student borrower . . . is

unable to complete the program in which such student is enrolled due to the closure of the

institution,” (“closed school” discharges), or “if such student’s eligibility to borrow under this

part . . . was falsely certified by the eligible institution or was falsely certified as a result of a


2

crime of identity theft,” (“false certification” discharges). 20 U.S.C. § 1087(c)(1).

3. In accordance with this authority, ED first put regulations governing defenses to

repayment in place in 1994. See ED, Final Regulations, William D. Ford Federal Direct Loan

Program, 59 Fed. Reg. 61664 (Dec. 1, 1994) (the “1994 Regulations”).

4. The 1994 regulations specified that a borrower “may assert as a defense against

repayment, any act or omission of the school attended by the student that would give rise to a

cause of action against the school under applicable State law,” 59 Fed. Reg. 61664, 61696, but

were silent on the process to assert a claim.

5. In May 2015, a large nationwide school operator, Corinthian Colleges, filed for

bankruptcy. ED, Notice of Proposed Rulemaking, Student Assistance General Provisions,

Federal Perkins Loan Program, Federal Family Education Loan Program, William D. Ford

Federal Direct Loan Program, and Teacher Education Assistance for College and Higher

Education Grant Program, 81 Fed. Reg. 39330, 39335 (June 16, 2016) (the “2016 NPRM”).

6. Citing the resulting borrower defense claims, which highlighted “difficulties in

application and interpretation of the current State law standard, as well as the lack of clarity

surrounding the procedures that apply for borrower defense,” and “the growth of the proprietary

higher education sector” more generally, ED began rulemaking on the topic of borrower defenses

to repayment, and, on November 1, 2016, published final regulations on the topic of borrower

defenses to repayment. See ED, Final Regulations, Student Assistance General Provisions,



Education Grant Program, 81 Fed. Reg. 75926, AR-K-1 (Nov. 1, 2016) (the “2016 Rule”).


3

7. In accordance with the HEA, the 2016 final regulations were scheduled to go into

effect on July 1, 2017. Id. at AR-K-2, 75927.

8. On May 24, 2017, the California Association of Private Postsecondary Schools

(“CAPPS”) filed a Complaint and Prayer for Declaratory and Injunctive Relief in the United

States District Court for the District of Columbia (Court), challenging the 2016 Rule. See

Complaint and Prayer for Declaratory and Injunctive Relief, California Association of Private

Postsecondary Schools v. DeVos, No. 17 Civ. 00999 (D.D.C. May 24, 2017).

9. On June 16, 2017, ED published a notification of the delay of the effective date of

certain provisions of the 2016 Regulations, pursuant to Section 705 of the Administrative

Procedure Act (“APA”), pending resolution of the judicial challenges to the regulations,

explaining that “[i]n light of the pending litigation, and for the following reasons, [ED] has

concluded that justice requires it to postpone the effectiveness of certain provisions of the final

regulations until the judicial challenges to the final regulations are resolved.” See ED, Final

Rule; Notification of Partial Delay of Effective Dates, Student Assistance General Provisions,



Education Grant Program, 82 Fed. Reg. 27621, AR-K-165 (June 16, 2017) (the “705 Notice”)

(citing 5 U.S.C. § 705).

10. The 705 Notice announced ED’s plan to review and revise the regulations through

the negotiated rulemaking process required under Section 492 of the HEA. Id. at AR-K-166.

11. On October 24, 2017, ED issued an interim final rule delaying the effective date

of the same provisions of the 2016 Rule until July 1, 2018, and issued a notice of proposed

rulemaking (“NRPM”) to further delay the effective date to July 1, 2019. See ED, Interim Final


4

Rule; Delay of Effective Date, Student Assistance General Provisions, Federal Perkins Loan

Program, Federal Family Education Loan Program, William D. Ford Federal Direct Loan

Program, and Teacher Education Assistance for College and Higher Education Grant Program,

82 Fed. Reg. 49114 (October 24, 2017) (the “Interim Final Rule”); and ED, Notice of Proposed

Rulemaking; Delay of Effective Date, Student Assistance General Provisions, Federal Perkins

Loan Program, Federal Family Education Loan Program, William D. Ford Federal Direct Loan

Program, and Teacher Education Assistance for College and Higher Education Grant Program,

82 Fed. Reg. 49155, AR-K-175 (October 24, 2017).

12. On February 14, 2018, ED published a final rule delaying the regulations'

effective date until July 1, 2019. See ED, Final Regulations, Student Assistance General

Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, William D.

Ford Federal Direct Loan Program, and Teacher Education Assistance for College and Higher

Education Grant Program, 83 FR 6458 (Feb. 14, 2018) (the “Final Delay Rule”).

13. Following issuance of the 705 Notice, two plaintiffs filed suit challenging the

validity of the 705 Notice. See Complaint for Declaratory and Injunctive Relief, Bauer v.

DeVos, No. 17 Civ. 1330 (D.D.C. Jul. 6, 2017). The attorneys general of eighteen States and the

District of Columbia also filed a complaint challenging the validity of the 705 Notice. See

Massachusetts v. U.S. Dep't of Educ., No. 17 Civ. 01331 (D.D.C. Jul. 6, 2017). Plaintiffs in both

cases subsequently amended their complaints to include a challenge to the Interim Final Rule and

the Final Delay Rule, and the cases were consolidated by the Court.

14. In November 2017, ED began a negotiated rule making process, and, on July 31,

2018, published a notice of proposed rulemaking. See ED, Notice of Proposed Rulemaking,

Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family


5

Education Loan Program, and William D. Ford Federal Direct Loan Program, 83 Fed. Reg.

37242 (July 31, 2018) (the “2018 NPRM”). The 2018 NPRM used the 1994 Regulations, which

were in effect at the time the 2018 NPRM was published, as the basis for proposed regulatory

amendments. Id. In response to the 2018 NPRM, more than 30,000 parties submitted comments

on the proposed regulations.

15. On September 12, 2018, the Court in Bauer issued a Memorandum Opinion and

Order in the consolidated matter, granting the plaintiffs’ motion for summary judgment. See

Bauer v. DeVos, 325 F. Supp. 3d 74 (D.D.C. 2018). On September 17, 2018 the Court issued a

Memorandum Opinion and Order vacating the Final Delay Rule and the 705 Notice, but

temporarily stayed vacatur of the 705 Notice. Bauer v. DeVos, 332 F. Supp. 3d 181, 183 (D.D.C.

2018). The stay expired on October 16, 2018, after which the 2016 Rule went into effect. Bauer

v. DeVos, No. 17 Civ. 1330, Minute Order (D.D.C. Oct. 12, 2018).

16. Stating that, “while the 2018 NPRM technically proposed to amend the pre-2016

regulations, . . . these final regulations, as a technical matter, amend the 2016 final regulations

which have since taken effect,” on September 23, 2019, ED published final regulations amending

Parts 668, 682, and 685, of Title 34 of the C.F.R., including the borrower defense regulations.

See ED, Final Rule, Student Assistance General Provisions, Federal Family Education Loan

Program, and William D. Ford Federal Direct Loan Program, 84 Fed. Reg. 49,788 (Sept. 23,

2019) (the “2019 Rule”).


6

Plaintiff’s Additional Facts as to Which Defendants Have Not Yet Agreed

I. Background1

A. The 1994 and 2016 Rules

17. Although initially intended to serve as a placeholder, the 1994 regulations remained

in place for two decades. 2016 NPRM, 81 Fed. Reg. at 39,333.

18. The 1994 regulations were rarely used until 2015, when state and federal

investigations revealed that Corinthian Colleges, a group of for-profit schools, had misrepresented

their job placement rates to students, eventually leading to the schools’ bankruptcy. 2016 NPRM,

81 Fed. Reg. at 39,335.

19. Corinthian’s collapse alone led to thousands of borrower defense claims being filed

with ED. 2016 NPRM, 81 Fed. Reg. at 39,335.

20. These claims, and “the growth of the proprietary higher education sector” more

generally, highlighted “difficulties in application and interpretation of the current State law

standard, as well as the lack of clarity surrounding the procedures that apply for borrower defense,”

leading ED to begin the process of amending its regulations in 2015. 2016 NPRM, 81 Fed. Reg.

at 39,336.

21. The 2016 Rule included several provisions designed to increase institutional

accountability and protect students and the public fisc, some of which directly regulated the

relationship between schools and ED, see, e.g., AR-K-53–89, and some of which regulated the

relationship between students and schools, and between students and ED. AR-K-89–116.

1 To the extent this statement cites materials not in the administrative record, Plaintiff maintains

that the Court may consider them as relevant background information. See Hadwan v. U.S. Dep’t

of State, 340 F. Supp. 3d 351, 355 (S.D.N.Y. 2018).


7

22. Generally, the 2016 Rule made it easier for student loan borrowers to assert a

borrower defense claim, both substantively and procedurally. See generally 34 C.F.R. § 685.222

(2016).

23. The 2016 Rule also updated the procedures for obtaining false certification and

closed school discharges. See, e.g., 34 C.F.R. § 668.14(b)(32) (2016), 685.214(c)(2)(ii) (2016).

24. The 2016 Rule added new provisions to program participation agreements related

to the resolution of disputes between students and schools. See, e.g., AR-K-96–106, 34 C.F.R. §

685.300 (2016).

25. The 2016 Rule required for-profit institutions to make a variety of disclosures to

students and potential students. See AR-K-85–96, 108–111; 34 C.F.R. § 668.41(h), (i) (2016).

B. The CAPPS and Bauer Litigation

26. Among other things, the Bauer I court held that, in issuing the Section 705 Stay,

ED had failed to consider “how the public interest or the interest of student borrowers would be

affected by its decision,” and that ED’s stated concern with compliance costs and “serious

questions” as to the lawfulness of the 2016 Rule, particularly the arbitration and class action waiver

provisions, represented “an unacknowledged and unexplained inconsistency” with the 2016 Rule.

Bauer I, 325 F. Supp. 3d at 108, 109.

27. ED did not release guidance to regulated entities informing them of their

obligations under the 2016 Rule until March 2019. Pulver Decl. ¶ 2, Ex. 1 (March Guidance).

28. ED did not begin to change internal processes to implement the 2016 Rule until

May 2019, with a “target date” for complete implementation of December 31, 2019. Pulver Decl.

¶ 3, Ex. 2 (Foss Decl.) at 327, 330–31.


8

29. In the CAPPS case, the court denied CAPPS’ motion for a preliminary injunction

in October 2018. CAPPS v. DeVos, 344 F. Supp. 3d 158 (D.D.C. 2018) (CAPPS I).

30. CAPPS subsequently amended its complaint, dropping its challenges to all parts of

the 2016 Rule other than the arbitration and class action provisions. See CAPPS v. DeVos, Civ.

No. 17-999 (RDM), 2020 WL 516455, at *6 (D.D.C. Jan. 31, 2020) (CAPPS II).

31. In January 2020, the court held that the challenged provisions did not violate the

Federal Arbitration Act and were not arbitrary and capricious, and granted summary judgment to

ED. CAPPS II, 2020 WL 516455, at *7–*16.

II. The Rulemaking at Issue

A. The 2017 – 18 Negotiated Rulemaking

32. On the same day ED issued its section 705 stay, it announced its intention to

establish a negotiated rulemaking committee “to develop proposed regulations to revise the [2016]

regulations on borrower defenses to repayment of Federal student loans and other matters.” ED,

Notice of intent to establish negotiated rulemaking committees; Negotiated Rulemaking

Committee; Public Hearings, 82 Fed. Reg. 27,640, AR-C-1 (June 16, 2017).

33. The negotiated rulemaking committee met in November 2017, January 2018, and

February 2018—while the Bauer litigation was still pending. See ED, Notice of Proposed

Rulemaking, Student Assistance General Provisions, Federal Perkins Loan Program, Federal

Family Education Loan Program, and William D. Ford Federal Direct Loan Program, 83 Fed. Reg.

37,242, AR-B-1, 9 (July 31, 2018) (2018 NPRM).

34. During the negotiated rulemaking sessions, ED’s negotiator stated that the agency

had already “for various reasons, … ruled [] out” “items that were in the 2016 reg.” AR-F-663:4–

8.


9

35. ED’s negotiator also stated that she could not provide “extensive information” on

the agency’s position regarding arbitration and other topics that were related to either the Bauer or

CAPPS litigation. See, e.g., AR-D-475:4–8.

36. The negotiated rulemaking committee disbanded on February 15, 2018 without

reaching consensus. 2018 NPRM, AR-B-8.

B. The Proposed Rule

37. On July 31, 2018, while the unlawful delay rules were in effect, ED issued a notice

of proposed rulemaking in which it “propose[d] rescission of the 2016 final regulations that [ED]

delayed through previous notification,” 2018 NPRM, AR-B-9.

38. That proposal treated the operative rule as the 1994 rule, “as if the delayed

amendments from the 2016 final regulations were never published.” 2018 NPRM, AR-B-67.

39. In the NPRM, ED proposed different procedures for obtaining relief, a higher

standard to obtain relief, the elimination of many disclosure requirements, and a variety of other

changes. See 2018 NPRM, AR-B-9.

40. The NPRM did not propose adding a limitations period for so-called “defensive”

claims, stating that “[u]nder the proposed standard, a borrower may be able to assert a defense to

repayment at any time during the repayment period, once the loan is in collections, regardless of

whether the collection proceeding is one year or many years after a borrower’s discovery of the

misrepresentation.” 2018 NPRM, AR-B-16.

41. During the thirty-day comment period that ended on August 30, 2018, more than

30,000 comments were submitted, including significant numbers of comments in opposition on

behalf of student and consumer advocates, civil rights organizations, veterans’ groups, legal

services providers, and federal, state, and local government officials. See ED, Final Rule, Student


10

Assistance General Provisions, Federal Family Education Loan program, and William D. Ford

Federal Direct Loan Program, 84 Fed. Reg. 49,788, AR-A-1, 2 (2019 Rule); see also Nat’l Ass’n

of State Student Grant & Aid Programs Comments (1419); Ams. for Fin. Reform Ed. Fund

Comments (13941); Am. Ass’n of Justice Comments (24647); NYLAG Comments (25400);

Coalition of 80 Organizations (26150); Lawyers’ Cmte. for Civ. Rts. Under Law Comments

(26266); Attys. General Comments (26408); N.Y. City Dep’t of Consumer Affs. Comments

(26489); House Cmte. on Educ. & Workforce Comments (26856); Advocates for Basic Legal

Equality (ABLE) Comments (27322); Public Citizen Comments (27568); The Institute for College

Access & Success (TICAS) Comments (28060); Ctr. for Responsible Lending (CRL) Comments

(28126); N.Y. State Higher Ed. Servs. Corp. Comments (28506); Legal Aid Community

Comments (29073); Nat’l Student Legal Def. Network (NSLDN) Borrower Defense Comments

(31574); New Am. Comments (31868).2

C. The Final Rule

42. After the decisions in Bauer, ED officials publicly stated that the agency would

issue a new notice of proposed rulemaking reflecting the Bauer decisions and that the 2016 Rule

had gone into effect, see Ben Unglesbee, As borrower defense gets another rewrite, for-profits

wrestle with uncertainty, Education Dive, Feb. 7, 2019, https://www.educationdive.com/news/as-

2 ED has not included the comments submitted to the agency as part of the Certified Administrative

Record, but rather “incorporated [them] by [] reference,” referring to

https://www.regulations.gov/docket?D=ED-2018-OPE-0027. AR-J-1. Plaintiff thus refers to

comments by the name of their author and unique identification number. Each comment is

available at https://www.regulations.gov/document?D=ED-2018-OPE-0027-[Identification

Number]. Per the Court’s June 23, 2020 Order (ECF 33), the parties will submit a joint appendix

containing each comment cited by the parties in summary judgment briefing after the completion

of briefing.


https://www.educationdive.com/news/as-borrower-defense-gets-another-rewrite-for-profits-wrestle-with-uncertai/547903/

https://www.regulations.gov/docket?D=ED-2018-OPE-0027

11

borrower-defense-gets-another-rewrite-for-profits-wrestle-with-uncertai/547903/; see also AR-

A-2 (acknowledging that agency had “initially considered publishing a second NPRM”).

43. Instead, nearly a year after the 2016 Rule went into effect, ED issued the 2019 Rule,

based on the 2018 NPRM and comments submitted in summer 2018, stating that “an additional

NPRM would further delay the finality of the rulemaking process.” 2019 Rule, AR-A-2

44. The 2019 Rule imposed a three-year limitations period on borrowers’ ability to

raise claims, on both defaulted and non-defaulted loans. 2019 Rule, AR-A-9–10, 35–37

(discussing 34 C.F.R. § 685.206(e) (2019)).

45. The 2019 Rule eliminated provisions for the group-wide adjudication of claims.

2019 Rule, AR-A-12–13.

46. The 2019 Rule imposed a new stricter standard for asserting defenses to repayment

based on misrepresentations, heightened borrowers’ evidentiary burden, and required borrowers

to show “financial harm” other than that associated with student loan debt. 2019 Rule, AR-A-14–

35 (discussing 34 C.F.R. § 685.206 (2019)).

47. The 2019 Rule eliminated conditions on the use of mandatory pre-dispute

arbitration clauses and class action bans. 2019 Rule, AR-A-52–58.

48. The 2019 Rule eliminated several mandatory disclosure requirements for schools

that were in financially precarious situations, had poor records of student success, or were closing.

2019 Rule, AR-A-89.

49. The 2019 Rule eliminated automatic closed school discharges. 2019 Rule, AR-A-

60–61.

50. The 2019 Rule curtailed and eliminated financial responsibility provisions. 2019

Rule, AR-A-73–89.


https://www.educationdive.com/news/as-borrower-defense-gets-another-rewrite-for-profits-wrestle-with-uncertai/547903/

12

51. In responding to comments about the effects of the 2019 Rule’s requirement that

students submit evidence beyond their own affidavits to seek a borrower defense discharge, ED

stated that “Student advocacy groups, for instance, may help student become wise consumers on

the front end, rather than successful borrower defense claimants after the fact.” 2019 Rule, AR-A-

31.

52. In responding to comments about students’ abilities to submit borrower defense

applications under the new standard, ED stated that “students may seek help from legal aid clinics

or take advantage of services from numerous student advocacy groups in submitting a borrower

defense to repayment application.” 2019 Rule, AR-A-41.

III. Plaintiff New York Legal Assistance Group

53. Plaintiff New York Legal Assistance Group (NYLAG) is a nonprofit organization

that provides a variety of free legal services, financial counseling, and community education

services to low-income New Yorkers in the areas of immigration, government benefits, family

law, disability rights, housing law, special education, and consumer debt, among others. Stevens

Decl. ¶ 2.

54. NYLAG provides a variety of services and resources to student borrowers seeking

relief from student loan debt, including representation in class action and individual litigation,

representation in administrative proceedings, and advice, counseling, and education about various

discharge and repayment options. Stevens Decl. ¶¶ 3–28.

55. NYLAG provides its services to student borrowers without cost. Stevens Decl. ¶ 4.

56. NYLAG staff attorneys and paralegals in NYLAG’s Consumer Protection Unit and

Special Litigation Unit provide advice and assistance to borrowers seeking closed school


13

discharges and borrower defense relief, and provide legal representation to some borrowers in

these processes. Stevens Decl. ¶¶ 5–6, 10–11.

57. Staff at NYLAG’s Consumer Protection Project, a division of the Consumer

Protection Unit, screen student borrowers for their potential eligibility for various kinds of loan

discharges, including borrower defense and closed school discharges, and work with borrowers to

complete the appropriate applications. Stevens Decl.¶¶ 13–26.

58. NYLAG’s financial counselors, who are not lawyers, provide a number of services

to student loan borrowers who are seeking relief from their debt, including information and

guidance about a variety of debt relief programs, and assistance to borrowers who are seeking

closed school discharges and asserting borrower defenses. Stevens Decl. ¶¶ 27, 28.

59. NYLAG operates a hotline for students seeking information and assistance related

to for-profit schools and has a dedicated email address for students who attend or attended such

schools and believe they were misled or defrauded. Stevens Decl. ¶ 9.

60. NYLAG attorneys or paralegals respond to calls to this hotline, and provide

information and advice, and, in some cases, representation, to callers. Stevens Decl. ¶ 10.

61. NYLAG attorneys have prepared a guide to assist borrowers who are navigating

the Borrower Defense process pro se, based on the 2016 Rule. Stevens Decl. ¶ 32.

62. Should the 2019 Rule remain in replace, NYLAG would need to divert resources

to revising and/or replacing this guide to reflect the changes to the 2016 Rule. Stevens Decl. ¶ 33.

63. Changes to the borrower defense and closed school discharge processes will lead

to an increased demand for NYLAG’s services, as fewer student borrowers will be able to complete

borrower defense applications on their own, and student borrowers will not be able to benefit from


14

automatic closed school discharges, group discharges, or participation in class actions. Stevens

Decl. ¶¶ 34, 40–43.

64. NYLAG’s staff will be required to spend more time on each application for

borrower defense relief than it would under the 2016 Rule, due to the increased evidentiary

requirements and other changes. Stevens Decl. ¶¶ 35–39.

65. The expected increase in numbers of borrowers in need of services, and increased

amount of time spent per student application, will both require NYLAG to divert resources away

from its other programs and services. Stevens Decl. ¶¶ 31, 37, 39, 43.


AUDREY STRAUSS

Acting United States Attorney for the

Southern District of New York

By: /s/ Jennifer C. Simon

Jennifer C. Simon

Assistant United States Attorney

86 Chambers Street, Third Floor

New York, New York 10007

(212) 637-2746

Counsel for Defendants

/s/ Adam R. Pulver

Adam R. Pulver

Adina H. Rosenbaum

PUBLIC CITIZEN LITIGATION GROUP

1600 20th Street NW

Washington, DC 20009

(202) 588-1000

[email protected]

Eileen M. Connor

Toby R. Merrill

Michael N. Turi

PROJECT ON PREDATORY STUDENT

LENDING,

LEGAL SERVICES CENTER OF

HARVARD LAW SCHOOL

122 Boylston Street

Jamaica Plain, MA 02130

(617) 522-3003

[email protected]



Documents

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · Case 3:19-cv-03674-WHA Document 56-3 Filed 11/14/19 Page 332 of 342Case 1:20-cv-01414-LGS Document 40-1 Filed 06/29/20