06.13.16

Scott, Waters Commend Education Department for Proposed Steps to Improve Borrower Defense Process for Students

WASHINGTON – Today, Committee on Education and the Workforce Ranking Member Bobby Scott (VA-03) and Rep. Maxine Waters, Ranking Member on the House Committee on Financial Services, issued the following joint statement in response to the Department of Education’s Notice of Proposed Rulemaking on borrower defense policies and procedures.

“We are pleased to see that in crafting their proposed rule on borrower defense, the Department of Education followed many recommendations we have made over the past few months. Throughout this process, House Democrats have called for an end to mandatory arbitration clauses in higher education; elimination of time limits that could prevent students from pursuing borrower defense claims; establishment of a strong federal standard to protect borrowers from unfair and deceptive practices; and development of a process to facilitate group borrower defense claims. In each of these areas, the proposed rule mirrors or closely adheres to our suggestions, and we thank the Department for taking those suggestions under consideration.

“Notwithstanding many of the positive provisions in the proposed rule, there remain areas where the rule can do more. Specifically, the rule limits the ability of the Department of Education to provide debt relief under a state law claim, even one brought by a state attorney general.  By limiting the authority of the Secretary of Education to grant relief based on state law claims, some borrowers will not be able to pursue a successful borrower defense claim. Furthermore, we appreciate that the Department’s expansion of what constitutes ‘substantial misrepresentation’ may improve the chances that defrauded borrowers receive relief.

“In the coming weeks, we will continue to review the rule to determine whether the department’s proposed borrower defense rule provides maximum protection with minimum paperwork burdens upon defrauded students. Holistically, the proposed rule is a strong first step to ensuring that students who are defrauded by their institutions of higher education are granted justice and relief.”

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