DeVos releases new loan forgiveness rule for students defrauded by their colleges

DeVos releases new loan forgiveness rule for students defrauded by their colleges
© Greg Nash

Education Secretary Betsy DeVosElizabeth (Betsy) Dee DeVosFailed charter schools cost federal government almost 5M in nine years: report Pelosi gets standing ovation at Kennedy Center Honors On The Money: Economy adds 266K jobs in strong November | Lawmakers sprint to avoid shutdown | Appropriators to hold crucial talks this weekend | Trump asks Supreme Court to halt Deutsche Bank subpoenas MORE on Friday unveiled a new loan forgiveness policy for students defrauded by their colleges.

The new regulations, which take effect July 1, 2020, are a rewrite of Obama-era policies that DeVos has said were not working. The effort is one of several conducted under President TrumpDonald John TrumpLawmakers release defense bill with parental leave-for-Space-Force deal House Democrats expected to unveil articles of impeachment Tuesday Houston police chief excoriates McConnell, Cornyn and Cruz on gun violence MORE’s administration to repeal or alter regulations initiated by his predecessor.


“If a school defrauds students, it must be held accountable,” DeVos said. “There is no place for fraud in higher education, and it will not be tolerated by this Administration.”

“We believe this final rule corrects the wrongs of the 2016 rule through common sense and carefully crafted reforms that hold colleges and universities accountable and treat students and taxpayers fairly.”

While the new policies do include provisions easing students’ paths in filing complaints, including allowing students to allege a specific amount of financial harm and to choose between accepting an institution's offer of a teach-out opportunity or submitting a closed school discharge to the department, it takes several steps to protect colleges from students’ claims. 

Among other items, the regulations allow institutions to choose their own internal dispute resolution processes rather than any federally mandated avenue; institute a three-year limit on filing a claim, either from the date of a student’s graduation or the school’s closure; mandate borrowers explicitly allege the financial harm incurred due to the college’s misrepresentation; and extend the Education Department’s policy of not presuming full relief of claims.

“With this policy overhaul, Secretary DeVos has cemented her legacy as best friend to predatory colleges and enemy to the students they rip off,” Yan Cao, a fellow at The Century Fund, said in a statement to The Associated Press.

“By leaving students on the hook for colleges’ illegal actions, today’s rule sends a clear message that there will be little or no consequences for returning to the misrepresentations and deceptions that characterized the for-profit college boom,” added James Kvaal, president of The Institute for College Access and Success. 

DeVos has emerged as a top target for Democrats during her tenure heading the Education Department, largely due to her support for charter schools, loosening of regulations for for-profit institutions and rewriting campus sexual assault policies.