Rules to help defrauded students clear loans being revised

Education

The Department of Education unveiled the massive proposed overhaul of the Borrower Defense rules in June 2016 and finalized the measures in October 2016, aiming to hold schools accountable in a court of law when they screw over students.

The borrower defense to repayment rule set out to better protect student borrowers against misleading and predatory practices by giving creating consistent, clear, fair and transparent processes to file claims.

Obama overhauled federal student lending, moving it from the banks to the Education Department and also trying to prevent students from taking out loans they could not repay after graduation. "Unfortunately, last year's rule-making effort missed an opportunity to get it right". Colleges and universities are especially concerned about the excessively broad definitions of substantial misrepresentation and breach of contract, the lack of meaningful due process protections for institutions and "financial triggers" under the new rules.

Senator Manchin expressed his concern about the significant cuts to the Department of Education and its effects on schools, students and families in West Virginia.

Under the Borrower Defense Regulations, a successful enforcement action against a school by a state Attorney General entitles borrowers to obtain loan forgiveness and enables the Department of Education to seek repayment of any amounts forgiven from the school.

Eight states and the District of Columbia filed a motion in federal court Tuesday seeking to retain the rules.

The plaintiff, The California Association of Private Postsecondary Schools, said the rule "threatens the existence" of many of its member institutions, according to the lawsuit.

"This is a betrayal of students and families across the country who are drowning in unaffordable debt", Healey said in a statement.

The Obama administration cracked down on for-profit chains such as The Corinthian Colleges and the ITT Technical Institute. Separately, 2,000 MA students who attended Corinthian Colleges, a for-profit chain that went bankrupt in 2015, also were eligible for loan discharges. Almost 4,500 American Career Institute students in MA have qualified for federal loan forgiveness of $30 million of debt. Specifically, if the estimated loan payments of a program's graduates exceed a certain percentage of their income over a period of years, then the program would risk losing federal student aid.

Rohit Chopra, a senior fellow at the Consumer Federation of America, lamented DeVos' decision to revise the rules.

"Relieving these hard-working Americans of their fraud-induced student debt will free them to participate more fully in their local economies, or even continue their educations with reputable schools", Becerra writes.

DeVos has previously voiced her opposition to discrimination and said federal law would apply to all schools receiving federal funds while declining to be more specific. "This helps to ensure that lawbreakers pay, not taxpayers".

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