Education Secretary seeks rule redo for defrauded college students

[Eugene]

Last edited Sat Jul 22, 2017, 01:20 PM - Edit history (1)

Source: Reuters

U.S. | Wed Jun 14, 2017 | 1:45pm EDT

Education Secretary seeks rule redo for defrauded college students

By Lisa Lambert | WASHINGTON

U.S. Education Secretary Betsy DeVos on Wednesday called for a "regulatory reset," and pressed pause on a rule intended to speedily cancel the student-loan debts of people defrauded by for-profit Corinthian Colleges Inc and others, so that it can be rewritten.

DeVos said the department is still granting debt relief that the students are entitled to by law as expeditiously as possible, and some borrowers should expect to obtain discharges within the next several weeks. The Education Department is processing 16,000 claims for relief.

DeVos, a Republican and advocate of public-private partnerships in education, said she was delaying the effective date of the rule on accelerating the process, which was enacted at the end of last year under the administration of former President Barack Obama, a Democrat.

"Unfortunately, last year’s rulemaking effort missed an opportunity to get it right," DeVos said in a statement. "The result is a muddled process that's unfair to students and schools, and puts taxpayers on the hook for significant costs. It’s time for a regulatory reset."

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Read more: http://www.reuters.com/article/us-usa-education-loans-idUSKBN1952LG

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DeVos to redo two Obama-era rules on for-profit schools

BY LYDIA WHEELER - 06/14/17 04:51 PM EDT

The Trump administration is planning to redo two Obama-era rules aimed at ensuring students at for-profit colleges get the education they pay for. ... Education Secretary Betsy DeVos said Wednesday the department is establishing rulemaking committees to rework the gainful employment and the borrow defense to repayment rules.

The gainful employment rule requires schools to ensure their career training programs actually prepare students for good-paying jobs that allow them to pay for their student loans. ... Under the rule, which went into effect in 2015, the estimated annual loan payment of a typical graduate has to be at or below 20 percent of his or her discretionary income or 8 percent of his or her total earnings or an institution risks losing its ability to participate in taxpayer-funded federal student aid programs.

The borrower defense to repayment rule set out to better protect student borrowers against misleading and predatory practices by giving creating consistent, clear, fair and transparent processes to file claims.

Due to pending litigation the Education Department said it’s delaying the borrower defense to repayment rule, which was set to take effect on July 1. ... For-profits have slammed the rule as unfairly punitive because it establishes automatic triggers that would require a school to put up a letter of credit — a large sum of money — every time a lawsuit is filed against it to protect taxpayers if the institution fails.