WASHINGTON, D.C. – The U.S. Department of Education publicly announced that it would miss a November 1 deadline to issue new rules to replace Obama-administration rules known as Borrower Defense to Repayment and Gainful Employment. Under Secretary DeVos, the Department had sought to delay, suspend, and rewrite the rules designed to protect students and hold career and technical colleges accountable. The Center for Responsible Lending (CRL) and other students and advocates were deeply concerned about the Department’s new proposals, which significantly weakened oversight and recourse for borrowers that had been harmed.
For consumers, the Department’s failures mean a victory over regulatory rollbacks that favored for-profit institutions and student loan servicers.
Whitney Barkley-Denney, a Senior Policy Counsel with the Center for Responsible Lending issued the following statement:
The Department of Education’s failure to meet the November deadline delivers an important consumer victory to the 44 million student loan borrowers who collectively owe $1.5 trillion in debt and recognizes that the Department needs to move carefully in light of ample evidence supporting the current rules. In the aftermath of successful lawsuits against for-profit colleges that promised high earnings and marketable skills, the Gainful Employment and Borrower Defense to Repayment rules served were critical bookend protections.
The Gainful Employment rule, finalized in 2014 and took effect in 2015, requires that career and technical training programs lead to income levels that enable their students to afford their student loan repayments. It also followed the failures of for-profit institutions like Corinthian Colleges, Everest, and ITT Tech that left student borrowers without degrees, credits that could not be transferred and losses to taxpayers who fund federal financial aid.
The second rule, known as Borrower Defense to Repayment enables eligible consumers who did not receive the education and training promised to apply for loan forgiveness. It was promulgated in response to the thousands of students harmed by the closure of Corinthian Colleges and their affiliate institutions Everest, Wyotech, and Heald.
Although it is not yet known what steps the Department will now take, the delay for further consideration is a victory against deregulation that was and remains needed.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Charlene Crowell at email@example.com.