Secretary Betsy DeVos, seen above speaking with Brookings Senior Fellow Russ Whitehurst, announced plans to revise two student loan regulations.

The Trump administration announced on Wednesday, June 14, that it plans to revise two Department of Education regulations intended to help borrowers who say they were misled by for-profit colleges.

Secretary of Education Betsy DeVos announced the decision yesterday that could undo a pair of Obama administration regulations that were crafted to protect students who attended career-preparation programs at for-profit colleges and either failed to earn projected incomes or claimed they were defrauded by such schools.

The first rule, known as the Borrower Defense to Repayment regulation, was to take effect next month. The Obama administration pitched the borrower defense rule as an easier process for handling claims by borrowers who say they were victims of for-profit school’s schemes and sought to have the federal government forgive their student loans.

The rule’s origins stem from the Corinthian College controversy in 2014; the rule gained traction in 2016 after politicians lent their support to the idea. The backing for the rule was bolstered after several for-profit college closed (such as the closure of ITT Tech) following the Corinthian College. Despite its support, concerns were raised about how long it would be around after Donald Trump won the presidency.

The second rule, the Gainful Employment regulation, is already in action and would put college programs at risk of losing federal student aid if graduates did not earn enough to support themselves and repay their student loans.

"My first priority is to protect students," said Secretary DeVos in the press release, "Fraud, especially fraud committed by a school, is simply unacceptable. Unfortunately, last year's rulemaking effort missed an opportunity to get it right... It's time to take a step back and make sure these rules achieve their purpose: helping harmed students...It is the Department's aim, and this Administration's commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow."

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The plans released by Secretary DeVos and the Department of Education drew criticism and predictions of challenges in court. John King, Education Secretary under the Obama administration and immediate predecessor to DeVos, called the decision “deeply worrisome and wrong.” King went on to say that the rules were designed to protect taxpayers and students, especially “low-income students and students of color — who are most likely to get taken advantage of by unscrupulous institutions."

The Institute for College Access and Success, a nonprofit organization aimed at making higher education more accessible, said the changes would make it easier for unethical schools “to defraud students and evade accountability.” According to the institute, the changes would also “make it harder for defrauded students to get their loans discharged.”

In her statement, Secretary of Education DeVos said that nearly 16,000 borrower defense claims are currently being processed, and the Department of Education will continue to process applications under the current rule until a new one is enacted.

Education officials plan to hold hearings regarding the newly proposed rules on July 10 in Washington D.C. with follow up hearings set for July 12 in Dallas, Texas.

There have actually been a few recent developments involving Corinthian College debt. Just recently, a judge ordered that the Department of Education come to a speedy decision regarding the case of a single mom who asked for student debt relief after she claimed she was defrauded and misled about potential earnings by the Corinthian for-profit Everest College.

While only an inference, one could surmise that this latest action by the courts spurred the Department of Education to action regarding the borrow defense to repayment regulation as well as the gainful employment regulation.

Image Copyright © Brookings Institution