DeVos’ Guts the Borrower Defense Rule, Making Justice for Defrauded Students More Difficult: What Our Partners and Allies Think

Washington, D.C.— On the eve of the Labor Day holiday weekend, the U.S. Department of Justice announced on August 30, 2019 its finalized changes to the 2016 Borrower Defense rule. In a significant rollback of its consumer protections, the new rule makes it more difficult for federal student loan borrowers to seek closed-school discharges for their debts on the grounds that their colleges defrauded them.

The Obama-era policy was created to address the exploitation and fraud orchestrated by colleges and career programs—notably within the for-profit college industry—and to provide a pathway for students to seek relief from their student loans after many saw their schools shut down upon being cut off from federal aid.

This is the latest effort by the Department under Sec. Betsy DeVos’ administration to deny defrauded students justice. At every turn, DeVos has made it clear she wants to protect predatory schools from any responsibility or obligation to the victims of their illegal actions. Past efforts were blocked by significant pushback by the public, as well as student and consumer advocacy groups. The condemnation of this new rule by these advocates has been swift.

Higher Ed, Not Debt and Generation Progress, with our coalition of partner organizations, will continue to fight for the rights of defrauded student loan borrowers. Here is what we and our partners have to say in response to this latest announcement.

The full statements by organizations are accessible via hyperlinks.

American Federation of Teachers President, Randi Weingarten 

“There’s a reason that releasing bad news on the eve of a long weekend is called ‘taking out the trash,’ because that’s exactly what this new rule is—trash. Betsy DeVos has again shown just how determined she is to hurt students while helping her friends who run failing for-profit colleges…The rule takes a scythe to defrauded borrowers, limiting their loan forgiveness by millions of dollars and forcing arbitration clauses that erase their rights. For many affected students, disproportionately veterans, first-generation college-goers and people of color, it’s a double whammy—not only are their finances and careers wrecked by worthless degrees, any chance at justice is then callously denied to them by DeVos.”

Center for American Progress Vice President for Postsecondary Education, Ben Miller

“Secretary DeVos continues to bend to the whims of the most exploitative schools. The changes outlined unfairly increase the burden on borrowers, which will continue the green light for predatory activity set by this administration. For instance, the new rule eliminates the auto-loan discharge for borrowers whose schools closed. The rule, which relies on warped logic, represents a miscarriage of justice for students who were cheated by predatory programs.”

Center for Responsible Lending Senior Policy Counsel, Ashley Harrington

“Instead of protecting the federal investment in higher education by ensuring that predatory schools are not allowed to waste taxpayer dollars, Secretary DeVos is fueling the growing $1.5 billion student loan debt crisis by shielding the interests of for-profit institutions and private corporations. Under these new rules, the Department is ignoring the hundreds of thousands of students who have been harmed by predatory programs and continue to wait for debt relief, as well as the consumers, taxpayers and state attorneys general who urged the Department to protect students and taxpayers.”

Education Trust Vice President for Higher Education, Wil Del Pilar
(Twitter thread)

“The Trump administration has once again decided to prop up predatory for-profit education companies and Wall Street shareholders at the expense of students. Today’s Department of Education announcement of their new ‘borrower defense to repayment’ rule sends a clear message: students who are preyed upon and defrauded by for-profit colleges are on their own. Put simply, the Department’s final rule damages the ability of any defrauded or misled borrower to get their federal loans discharged.”

Generation Progress Executive Director, Brent Cohen

“Students who are scammed by predatory institutions deserve to have their loans forgiven. Generation Progress has worked directly with thousands of students cheated by these institutions, and we know that the callous inaction of this administration has meant that their lives and economic prospects have been kept in painful limbo for years. These students, who are disproportionately low-income students of color and first-generation college students, have already been failed here by the federal government’s lack of oversight, and, with this rule, Secretary DeVos’ Department of Education has failed them again.”

National Consumer Law Center Attorney, Abby Shafroth

“This rollback by the Department will encourage schools to break the law, engage in risky practices that lead to abrupt closures, and harm students with impunity…There will be more students harmed by schools attempting to boost enrollment through deceptive marketing and misrepresentations, and more schools closing before students can graduate. And those students will be much less likely to get relief from their student loans. Today’s action by the Department will result in a high risk of default on student loans and lifelong financial instability for the students.”

National Student Legal Defense Network President, Aaron Ament

“Secretary DeVos continues to be more focused on collecting money from defrauded students than going after the predatory schools and corporate owners who cheated them out of their education. This new rule rigs the system against students by cutting off nearly every avenue for individual borrowers to assert their rights when they are harmed.”

The Century Foundation Fellow, Yan Cao

“Secretary DeVos’s new borrower defense policy is heartless and draconian. It makes it nearly impossible for students who have been defrauded by predatory colleges to get the relief they deserve. And, DeVos’s outright repeal of the ‘gainful employment’ rule earlier this summer all but guarantees that instances of colleges misleading and exploiting students for profits will proliferate.

With this policy overhaul, Secretary DeVos has cemented her legacy as best friend to predatory colleges and enemy to the students they rip-off. In refusing to process outstanding loan relief applications, and now making it significantly harder for students to show they should get relief in the first place, Secretary DeVos is erasing all pretext that she cares about student borrowers.

For now, the only silver lining is that, until these changes take effect, DeVos remains under a court order to implement the Obama-era borrower defense laws. It’s time to remind DeVos that she is not above the law, and must grant borrowers the relief they are entitled to.”

The Institute for College Access & Success President, James Kvaal

“The new “borrower defense rule” does anything but defend students. In fact, it makes it almost impossible for students who are lied to, defrauded, or otherwise abused by their colleges to get a fresh start. It requires students to submit evidence that students do not have and cannot get, and it prevents students who were harmed as a group from getting relief as a group. By the Department’s own estimates, their rule would discharge only a tiny fraction of the loans made to cheated borrowers.”

The Project on Predatory Student Lending Legal Director, Eileen Connor.

“Today Betsy DeVos is throwing hundreds of thousands of students who have been defrauded by abusive for-profit colleges under the bus…For the past two years, DeVos has refused to follow existing law and cancel the loans for these students, leaving them in debt they can’t get away from and their lives in limbo. Now, she’s shredding a set of fair, common-sense rules that level the playing field between students and those who take advantage of them. If Betsy DeVos won’t do her job and stand up for students, then we will fill that void. That is why we will be filing a suit challenging these harmful new regulations that give a green light to for-profit colleges to continue scamming students”

Young Invincibles Executive Director, Rachel Fleischer

“More than ever, a higher education is the best path for a young person to find a job that helps them achieve their financial goals and build a stable life. But too many schools have failed to meet their obligation to the young people who invested in their education, leaving 180,000 borrowers buried in debt with degrees that won’t help them find a job.” 

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