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DeVos Axes Obama-era Borrower Defense Rule

Friday, August 30, 2019
Ashley Harrington

WASHINGTON, D.C. – Today, the U.S. Department of Education Secretary Betsy DeVos announced her new Borrower Defense to Repayment rule. These final rules will severely weaken accountability for for-profit colleges and prevent defrauded students from accessing relief.

The new rules arrive more than a year after DeVos’ decision to rescind the Obama Administration’s Borrower Defense to Repayment rule, which provided a viable pathway for students to obtain relief and institutions to be held accountable. Among its many changes, the Department’s new regulations place an extremely high bar in front of borrowers seeking redress, requiring lengthy and extensive documentation of “harm” before a claim can be reviewed. The new regulations also set aside important provisions that provide for group claim relief, automatic discharge after a school closes, and prevent schools from limiting student rights through mandatory forced arbitration clauses.

Before announcing a draft proposal of the new rules, the Department held a negotiated rule-making process in late 2017 and early 2018, where CRL and other participants gathered with DOE officials to strike an agreement on a borrower defense rule to protect students defrauded by their schools.

Ashley Harrington, Senior Policy Counsel at the Center for Responsible Lending, and a primary negotiator during the negotiated rule-making process, made the following statement:

Instead of protecting the federal investment in higher education by ensuring that predatory schools are not allowed to waste taxpayer dollars, Secretary DeVos is fueling the growing $1.5 billion student loan debt crisis by shielding the interests of for-profit institutions and private corporations. Under these new rules, the Department is ignoring the hundreds of thousands of students who have been harmed by predatory programs and continue to wait for debt relief, as well as the consumers, taxpayers and state attorneys general who urged the Department to protect students and taxpayers.

After the collapse of Corinthian College and ITT Tech, two of the largest for-profit higher education companies in the country, the Obama Administration created the Borrower Defense rule to protect students and taxpayers from deceptive practices that could jeopardize the future of thousands of students and our economy. Today, that standard is no longer in place thanks to an Administration that safeguards the interests of a wealthy few and is failing to work for students. This rule flies in the face of the goals of the Higher Education Act and will ultimately undermine the future of thousands of Americans. Today’s announcement makes it even more imperative that Congress act to re-authorize the Higher Education Act and include true accountability in its provisions, and that states create their own accountability mechanisms for predatory for-profit colleges.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Vincenza Previte at vincenza.previte@responsiblelending.org.