Texas trade association suing to stop new borrower defense rule because it ‘all but ensures’ claims will be approved

A trade association representing more than 70 for-profit higher education institutions in Texas said it will file a lawsuit Tuesday to try to stop new rules governing a federal program that forgives loans for borrowers whose colleges misled them.
Career Colleges & Schools of Texas said the new regulations for the U.S. Department of Education’s borrower defense to repayment program risk creating “crippling liability” against its members and other colleges in the state. The overhauled borrower defense program, which is set to take effect July 1, creates a process that “all but ensures” borrowers’ claims will be approved, even as it cuts procedures needed to protect colleges against inaccurate loan discharges, the group said.
The group argues the new borrower defense regulations should be set aside for violating the U.S. Constitution and federal law directing how agencies establish new regulations.