July 25, 2017

Alexis Goldstein
(202) 973-8005

Department of Education’s Proposed New Borrower Defense Rule Sacrifices Students to For-Profit Industry Greed

Today, the Department of Education proposed a new Borrower Defense rule that makes it even more difficult for students at schools that broke the law to get the debt relief they deserve. This is the latest move in Education Secretary Betsy Devos’s ongoing assault on student protections.

“The proposed Borrower Defense rule sacrifices students’ rights in order to line the pockets of executives at for-profit colleges, an industry that has shown time and again that it will use taxpayer dollars to deceive and defraud its own students.” said Alexis Goldstein, AFR’s Senior Policy Analyst. “With this rule and its extreme and absurd barriers to relief, Devos effectively tells students that if a school scams them, they’re on their own.”

The new proposal rolls back the 2016 rule’s prohibitions on forced arbitration clauses and class action bans, tools which are used by for-profit colleges to take away the rights of students to hold the school accountable in court. This decision places the Department of Education’s finger on the scales of justice in favor of for-profit colleges flush with money, attorneys, and legal expertise, totally abandoning students who are just trying to make a better life for themselves.

The proposed rule also creates new hurdles for defrauded students, such as requiring them to submit proof of bad behavior by the school. Astonishingly, the proposal would then let the school see whatever evidence the student could compile, but would not allow the student to see the school’s response. It removes two crucial student protections the 2016 rule laid out: automatic “closed school discharges” for students at shuttered schools, and a process for granting debt relief to groups of students at schools with systemic misconduct. And it attempts to deny the ability to even apply for relief to any borrower who isn’t already in default or collections.

The Department’s proposal gives the green light to bad actors, and will lead to more losses by taxpayers and more illegitimate debt burdened by students trying to improve their lives.