Trump Administration puts hold on new loan forgiveness rule

Student loans at center of federal lawsuit
Posted at 5:11 PM, Jul 11, 2017
and last updated 2017-07-11 17:11:21-04

The Trump administration is making it harder for students to have their loans forgiven and now it's at the center of a federal lawsuit.

18 states are now suing the Department of Education and Trump appointee Betsy Devos, after she suspended an Obama rule that helps students who were defrauded by for-profit colleges. Colleges like ITT,  which left thousands of Florida students locked out of their dreams.

ABC Action News was there last year as ITT students learned they were being hung out to dry.

Their time and their money wasted after the school was forced to close when the Department of Education -- then under the Obama administration -- increased the standards and requirements of the for-profit schools.

Now the Department of Education -- under the Trump administration-- has discontinued an Obama rule that would have automatically relieved students of their loans if the college was found to have committed fraud.

"The students are left with no recourse , which is really scary," says Tampa attorney Jesse Hoyer, who has sued  several non-profit colleges. "It's a predatory industry that's stealing billions of dollars a year, the rules were intended to help students, help taxpayers and that's it."

Now, Education Secretary Betsy Devos is being sued over her decision to freeze the rule that would have protected students. And noticeably absent from the list is Florida Attorney General Pam Bondi, who faced criticism when she declined to investigate fraud allegations against another famous for-profit college -- Trump University.