Education Secretary Betsy DeVos recently introduced new rules that experts argue will make it tougher for student debt relief.
On July 25, Education Secretary Betsy DeVos introduced new rules she said will protect students from being defrauded by for-profit schools. But higher education advocates argued that these rules will actually make it harder for defrauded students to have their education loans forgiven.
DeVos’ proposal is meant to replace the Borrower Defense Rules, a set of Obama-era regulations that were never implemented. The Borrower Defense Rules were designed to clarify the debt relief process for students defrauded by their school. The rules were supposed to take effect in July 2017 until DeVos delayed them and then set about replacing them, the Tampa Bay Times reported.
The new proposal states that borrowers are eligible for student loan forgiveness if they can prove their school misled them through statements or actions, causing them to take out loans or enroll in the college.
This requires students to meet a high burden of proof in order to have their student loans forgiven. The original Borrower Defense Rules cast a much wider net for loan forgiveness.
Although the Department of Education acknowledged that students deserve fraud protection, officials stressed that students need to do their due diligence when choosing a college. Supporting documents stated that college students should be able to make an informed decision about a school, assuming they have access to reliable data.
The new proposal will also give schools an opportunity to respond to fraud charges since these allegations could potentially damage the school’s reputation. And the students would have to enter into arbitration agreements where they agree not to sue the school.
DeVos’ update proposal is estimated to save taxpayers $13 billion over the next 10 years. This is primarily because far fewer students will receive debt relief. Over 100,000 students have submitted fraud claims since 2015 and most are still being reviewed by Dept. officials.
Student rights advocates were quick to criticize DeVos’ proposal and argue that it would keep victims from receiving the help they need. Bob Shireman, a former education official under President Obama, said called the proposal “the most damaging action Betsy DeVos has taken since assuming office."
Meanwhile, some Republican officials and for-profit industry leaders praised DeVos’ proposal. Steve Gunderson, CEO of Career Education Colleges and Universities – a trade group representing for-profit colleges – said the new rules will balance out a system that previously offered "carte blanche approval" to claims of fraud.
Senator Lamar Alexander was also in favor of the new regulations, saying the Obama Administration went too far and “put taxpayers on the hook for too many loans."
Over the next 30 days, the Department will be gathering feedback over these proposed changes. The new rules would go into effect for loans taken out after July 1, 2019.