Committee Democrats to DeVos: Proposed Borrowers Defense Rule Will Hurt Defrauded Students
“The proposed rule is based on a faulty premise: that the greatest risk to taxpayers is posed by students submitting frivolous claims and not by fraudulent institutions.”
WASHINGTON – All 17 Democratic Members of the Committee on Education and the Workforce, led by Ranking Member Bobby Scott (VA-03), sent a letter to Secretary of Education Betsy DeVos to express their strong opposition to the Department’s proposed rule on borrower defense to repayment. The letter details seven major concerns the Members have with the proposed rule and calls on the Department to abandon its proposal.
The proposed rule, “severely limits eligibility of defrauded borrowers to seek and ultimately receive relief by applying an unrealistically high federal standard for borrower defense claims, forbidding automatic discharge, and imposing a short time limit to file a claim. To further limit relief for deserving students, the Department seeks to create barriers that will deter borrowers from applying for borrower defense,” the Members wrote.
In 2016, following the abrupt collapse of Corinthian Colleges and ITT Technical Institute, the Obama administration finalized a rule that established a more effective process for providing relief to students defrauded by a for-profit institution. The Trump administration twice delayed the implementation of the Obama-era rule before proposing a revised version in July. According to the Department’s own estimates, the new proposed rule would deny defrauded students as much as $12.7 billion over 10 years.
The Members’ major concerns articulated in the letter are:
- The proposed rule creates an unfair federal standard, making it nearly impossible for borrowers to receive a discharge.
- The proposed rule would ban automatic group discharge, making the process inefficient for students and the Department.
- The proposed rule establishes an unrealistic time frame for borrowers to file a claim in an attempt to limit applications.
- The proposed rule would incentivize loan defaults, causing long-term harm to borrowers and taxpayers.
- The proposed rule would require borrowers to submit irrelevant information and subject themselves to institutional retribution in order to thwart interested borrowers in asserting a claim.
- The proposed rule impedes loan discharge for students enrolled in schools that close.
- The proposed rule fails to hold risky institutions financially liable, shifting the burden onto students and taxpayers.
“Taken in total, the Department’s proposed rule is based on a faulty premise: that the greatest risk to taxpayers is posed by students submitting frivolous claims and not by fraudulent institutions,” the Members wrote.
The letter was sent as part of a 30-day public comment period, which closed at midnight on Thursday, August 30.
To read the full text of the letter, click here.
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