The U.S. Department of Education has released its new Borrower Defense to Repayment rule, designed to give students debt relief in cases where they took out loans to pay for fraudulent schools. The new version, which goes into effect on July 1, 2020, makes it harder for federal student loan borrowers to have their debts forgiven, enforcing stricter criteria.
The updated regulations come more than a year after the Department of Education changed the 2016 Obama-era rule. In late 2017 and early 2018, the department entered into a negotiated rulemaking process – a meeting of federal agencies and constituents – to hash out a new draft.
Defrauding students “will not be tolerated by this Administration,” U.S. Secretary of Education Betsy DeVos said in a statement released late last week. “The new regulations are aimed at preventing this behavior because students deserve better, and all institutions must do better.”
She added that “the old rules just weren’t working,” and that the final rule would help students through “common sense and carefully crafted reforms that hold colleges and universities accountable and treat students and taxpayers fairly.”
But not everyone is feeling celebratory. Rep. Bobby Scott, chairman of the House education committee, criticized the new version, and Harvard Law School’s Project on Predatory Student Lending has already promised an upcoming lawsuit.
The regulations “set a very high bar” for students to access debt relief while allowing for-profit schools to “continue to set a low bar for themselves,” said Ashley Harrington, senior policy counsel at the Center for Responsible Lending.
Harrington was also a primary negotiator during the negotiated rule-making process, an experience she described as “uncomfortable.” There were more for-profit representatives present compared to the negotiated rule-making process in 2016, she said, and many of the proposals that cropped up in the final document were not discussed.
