Brief of Professors Sant'Ambrogio and Zimmerman as Amicus Curiae in Support of Plaintiffs' Motion for Summary Judgment in Bauer v. Devos

Abstract

This amicus brief explains why the Education Department's recent decision to suspend new rules that would help defrauded students obtain debt relief was arbitrary and capricious. Following an extensive process that generated over 50,000 public comments, on November 1, 2016, the Department of Education released new rules for students seeking debt relief (the “2016 Regulations”). The 2016 Regulations included a “group process” under which Department officials could commence a single action to consistently adjudicate common facts and claims on behalf of a large group of student borrowers against the same school. The process was adopted in response to the collapse of the Corinthian Colleges, which prompted thousands of students to petition the Department for debt relief in 2016.

At the time, the Department stated that a centralized hearing process offered many benefits: (1) students and schools gained access to a “consistent, clear, fair, and transparent” process; (2) administrators conserved resources by avoiding repetitive claims; and (3) taxpayers saved money when discharged federal loans were offset by money recovered from schools found to have engaged in misconduct. But two weeks before the rules were to take effect, the Department suspended this procedure, without explanation, just as its backlog of claims surged to historic levels (the “Delay Rule”). Four months later, the Department further delayed the effective date of the 2016 Regulations in an Interim Final Rule.

We offer the Court a unique perspective, based on extensive research, about the impact of the Department’s delay on the “group process,” which was a critical part of the 2016 Regulations. The Department’s failure to provide any explanation for suspending that part of the 2016 Regulations was itself “arbitrary and capricious” and “contrary to law.” As we show, the Department carefully crafted this group process, repeatedly emphasizing that it was necessary to fairly resolve large numbers of student claims for debt relief. But just when the Department faced mounting backlogs of those same claims, the Department suspended that part of the rule without any justification. With a backlog of student applications approaching 100,000 claims, the Department has needlessly shelved a process carefully designed to provide students with swift relief.