Student loan debt is a persistent drag on the economic lives of many Americans – only mortgage debt ranks higher on the list of largest categories of consumer debt. The Baby Boomer generation seemed to enjoy affordable tuition and great job prospects upon graduation. For today’s graduates, life seems to be a bit more difficult.
To make matters worse, the drive for higher education (and using student loans to pay for it) has driven the cost of tuition greatly. Many colleges can make money from federal funding and hiking tuition. The allure of profits exploded the number of for-profit institutions looking for a piece of the student loan market.
Several of these institutions fell under scrutiny for predatory practices and false advertising claims to lure students aboard. They were accused of saddling students with education debt without actually providing an education leading to gainful employment or a degree of any worth.
While there are countless government programs designed to help students with student loan repayment, some for-profit borrowers needed more help. That’s where the Borrower Defense to Repayment Rules comes into play.
What Is the Rule?
If a student borrower from a for-profit can prove they were misled or defrauded by an institution, then they stand to have their loans forgiven. It’s a difficult process to navigate, but in the end, there is relief for borrowers who can qualify under the policy.
The key is to show evidence of an act or omission committed by the school that violates the law directly related to student loans or educational services. In some cases, large schools violate these laws on a large scale, leading them to closing their doors or even pay hefty fines.
One of the recent, high-profile cases of fraud involved a for-profit institution known as DeVry University. Famous for its relentless television advertising, DeVry fell afoul of federal guidelines regarding deceptive advertising. The school settled the case with the Federal Trade Commission for over $100 million, but it continued to operate as a higher education institution.
Is It Sticking Around?
The program received national attention in the spring and summer of 2017. It was called into question when the Department of Education decided to put the brakes on the regulation. Secretary Betsy DeVos and the Department of Education put the program on hold to “rework” some of its aspects.
The number of Americans affected by the delay is significant. At the time of writing, over 68,000 applications under the previous Borrower Defense to Repayment Rule are in limbo until the new rules are announced by the federal authorities.
In the meantime, there are still other avenues to find repayment relief to manage a student loan burden. Loan deferment, income-driven repayment plans, forbearance, and federal loan consolidation are all alternatives in the absence of banking on the borrower defense to repayment rule.