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Student Loans Rule Passes Despite Conservative Push Back

— October 24, 2018

Student Loans Rule Passes Despite Conservation Push Back

Although many conservatives fought to limit the ability of students to cancel their student loans incurred at universities that defrauded them, and the colleges have themselves fought hard against it as well, it looks like students will be afforded options anyway.  Rules implemented prior to the Trump administration, during the Obama-era, have secured their footing despite the current administration’s efforts to delay them.

The rule, finalized under the prior administration, is intended to strengthen borrower defense that allows forgiveness of federal student loans for borrowers who were cheated by colleges that lied about job placement rates or otherwise defied state consumer protection laws.  Consumer advocates have indicated the government should take an aggressive stance against colleges that take advantage of veterans and vulnerable students.

Education Secretary Betsy DeVos fought hard to eliminate the rule but will now be tasked with seeing it through.  In June 2017, DeVos put a hold on the regulations and said she would replace them with her own.  Two former students of a for-profit college, as well as 19 states and the District, filed a lawsuit in order to stop the delay.

Student Loans Rule Passes Despite Conservative Push Back
Photo by Patricia Beatrix Villanueva on Unsplash

Then, in September, a U.S. district court said that the DeVos move was “arbitrary and capricious.”  The agency had until this month to try to issue a new delay, but the Education Department said it would not try again.  “The secretary respects the role of the court and will defer to its judgment in whether parts of the 2016 rule will go into effect,” Elizabeth Hill, a DeVos spokesperson said.

In a related suit, the California Association of Private Postsecondary Schools had asked the court to block the Obama-era standards.  The court denied the motion.  U.S. District Judge Randolph D. Moss, nominated by Barack Obama, ruled that the association had failed to show it would suffer irreparable harm if the rule took effect but did not rule on the merits of the case.

“Today’s decision is a huge win for defrauded borrowers around the country,” said Julie Murray, an attorney who represented the students suing the department. “The rule is finally in effect.  No more excuses.  No more delays.  Industry will continue to challenge the rule in court, but we will work as long as it takes to defeat those corporate interests and an administration beholden to them.”

Steve Gunderson, president of Career Education Colleges and Universities, said the current administration should be free to rewrite the rules and is hopeful for a “much more balanced regulation providing due process to both students and schools.”

Hill confirmed the department still wants to rewrite the regulations.  “Regardless of what the court decides, many provisions of the 2016 regulations are bad policy, and the department will continue the work of finalizing a new rule that protects both borrowers and taxpayers,” she said.

This summer, DeVos published her proposed replacement, in which students would be required to prove schools knowingly deceived them to get their federal loans canceled.  Students would have to prove their claims individually.  The soonest the department can put this into effect is July 2020.


Court allows Obama-era student loan rules to take effect, delivering defeat to DeVos

Education Department to implement Obama-era student loan regulation after lawsuit loss

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