A Murky Future for Borrower Defense
Paying off loans for a college education is hard enough when your education was legitimate. For those who fell victim to for-profit schools’ aggressive recruiting methods, high prices, and low-quality education, it can be nearly impossible to pay off their loans.
Thankfully, the federal government allows students to apply for forgiveness of their federal student loans if students were misled by their school. It’s called Borrower Defense to Repayment, and applicants can apply if they can prove the school violated consumer protection laws.
Before he left office, President Obama granted tens of thousands of applications and worked to expand the Borrower Defense rules to make it easier for defrauded students to find relief. Those new rules were supposed to take effect July 1, 2017.
However, Secretary of Education Betsy DeVos postponed implementing those rules indefinitely. She seeks to rewrite the rules again because the previous ones were “unfair to students and schools, and puts taxpayers on the hook for significant costs,” even though experts argue the opposite was true.
The Secretary’s new rules won’t take effect until 2019, the Department wrote in a recent federal register notice. Secretary DeVos explained that the negotiated rulemaking process they were using would not start until mid-November, which is after the November 1 deadline necessary for the rules to take effect the following July. Therefore, the new rules cannot possibly take effect until July 2019.
For many, this is much too long, considering the new rules should have already begun.
While the new rules are postponed, defrauded borrowers can still submit an application under the current rules. However, some experts despair because the Department of Education is sitting on over 87,000 applications. In fact, not one has been approved since Secretary DeVos was appointed in February.
Furthermore, an anonymous source in the Department of Education told Associated Press that Secretary DeVos is considering granting only partial forgiveness for those whose Borrower Defense applications are approved.
According to the existing Borrower Defense rules, applicants can get part or all of their loans discharged. It’s not clear, however, in what particular circumstances borrowers would be granted full versus partial forgiveness. For many, it’s alarming that Secretary DeVos would not grant full discharge to students whose peers had gotten their loans completely erased during the previous administration.
Eileen Connor, a litigator at Harvard University’s Project on Predatory Student Lending, says, “it is completely unfair that a happenstance of timing is going to mean that one student who’s been defrauded is going to have full cancellation and the next is not.”
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