AG Grewal Leads Multistate Pushback on Federal Policy Changes and Files Lawsuit Demanding Answers from U.S. Department of Education

New Jersey Strong news – Trenton, NJ: NJ OAG reports 9.17.2019

TRENTON – Attorney General Gurbir S. Grewal today announced that his office is taking two related actions in response to the U.S. Department of Education’s repeated refusals to cooperate with state investigations of fraudulent and predatory practices by student loan services, for-profit schools, and others.

In the first action, Attorney General Grewal led a coalition of 17 attorneys general, along with the attorneys general for Colorado, New York, and Washington, in a letter opposing a policy change by the Education Department that would curtail its information with state law enforcement agencies. The attorney generals assert that the Education Department is harming their ability to protect students and borrowers from fraud and other abuses.

In the second action, the Office of the Attorney General filed a lawsuit in federal court, alleging a “recent pattern and practice” by the Education Department “of shutting down cooperation and information sharing with state law enforcement agencies in areas where federal and state regulators have historically worked hand-in-hand.”
The lawsuit seeks to compel the Education Department to disclose the basis for its actions, preventing the federal government from continuing on its current path without making public its reasons for cutting off cooperation with state law enforcement agencies.

“Recent actions by the U.S. Department of Education demonstrate that its current leadership is more committed to shielding student loan servicers and predatory schools from scrutiny than it is committed to protecting students from misconduct,” said Attorney General Grewal.

“Attorneys General from around the country have been voicing their concerns with the Department for more than a year,” Attorney General Grewal said, “but the Department has refused to be forthcoming with explanations for its conduct. We’ve been left with little choice but to sue to put an end to the Department’s stonewalling.”

Monday’s multistate letter marks at least the third time in just over a year that a group of attorneys general has written to the Education Department to express concern about new policies scaling back state law enforcement agencies’ access to federal student loan data and other information relevant to investigations of state law violations.

Access to information from federal data systems is important to state-level efforts to “combat widespread fraud in the higher education finance sector,” the letter from the attorneys general notes, and the Education Department has historically given state law enforcement agencies access to this information.

The letter follows others in which attorneys general have explained that cooperation and information-sharing between the Education Department and state law enforcement agencies has been integral to providing relief to students across the U.S. who have been victims of fraud and other misconduct by for-profit schools and other actors in the higher-education sector.

The concerns raised by the multistate coalition are echoed in the complaint filed by the Office of the New Jersey Attorney General today in U.S. District Court in New Jersey.

The complaint alleges that the Education Department has not fully responded to information requests made by Attorney General Grewal’s office more than a year ago. Those requests, submitted in August 2018, sought to address the lack of cooperation and information-sharing by the Education Department with attorneys general investigating student loan servicers, for-profit schools, and other institutions in the higher-education industry.

Because the Education Department “has persisted in its refusals to cooperate with state law enforcement agencies, without ever adequately explaining its resistance,” the complaint states, the Office of the Attorney General “now seeks an order from [the] Court compelling [the Education Department] to comply with its disclosure obligations under federal law.”

Deputy Attorney General Eric Apar and Assistant Attorney General Glenn J. Moramarco are representing the Office of the Attorney General in the lawsuit.