Overnight Regulation: Feds propose rules to help student loan borrowers

Welcome to Overnight Regulation, your daily rundown of the news from Capitol Hill and beyond. It's Monday evening here in Washington and we're sending our thoughts and prayers to Orlando. 

Here's the latest. 

 

THE BIG STORY 

The Obama administration proposed new rules Monday to strengthen protections for student borrowers and safeguard their right to settle disputes with for-profit colleges in court.

Under the Education Department rule, both for-profit and nonprofit colleges and universities that receive federal funds would be prohibited from including forced arbitration clauses in student enrollment contracts. These clauses -- typically buried in the fine print -- revoke a student's right to settle a dispute with a school in court or join a class action lawsuit.

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"These regulations would prevent institutions from using these clauses as a shield to skirt accountability to their students, to the Department and to taxpayers," Under Secretary of Education Ted Mitchell said in a statement. "By allowing students to bring lawsuits against a school for alleged wrongdoing, the regulations remove the veil of secrecy, create increased transparency, and give borrowers full access to legal redress."

The rules announced Monday also streamline relief for student borrowers who have been defrauded or deceived by a school. It would also create a process for group-wide loan discharges when large numbers of students have been victims of misconduct.

Under the rules, financially risky schools would be required to provide clear, plain-language warnings to prospective students, current students and the public. 

"We won't sit idly by while dodgy schools leave students with piles of debt and taxpayers holding the bag," Education Secretary John King Jr. said in a statement. "All students who are defrauded deserve an efficient, transparent, and fair path to the relief they are owed, and the schools should be held responsible for their actions."

Public Citizen, which petitioned the department back in February to ban schools from using forced arbitration clauses, called the proposed rule an "important step forward."

"The proposal would save U.S. taxpayers money and help to make whole the thousands of students who are being swindled by hucksters masquerading as schools," the group's attorney, Julie Murray, said in a statement.

"We do, however, have concerns that the department's proposal would continue to permit schools to use pre-dispute arbitration agreements against vulnerable students by portraying the agreements as 'voluntary,' even when students feel compelled to sign them."

Public Citizen urged the department to adopt a rule with "teeth."

It suggested prohibiting all pre-dispute arbitration agreements with students, not just those that a school expressly conditions on a student's enrollment or right to continue at a school. It also said the department should broaden the scope of covered claims and ensure that all students, not just federal borrowers, are covered by the rule if they attend a school that receives federal aid.

The rule is scheduled to be published in the Federal Register on Thursday. Public comments will be due by Aug. 1, and the department said it expects to have a final rule by Nov. 1. http://bit.ly/1U9HILE

 

ON TAP FOR TUESDAY 

The Senate Health, Education, Labor and Pensions Committee will hold a hearing to discuss implementing the Child Care Development Block Grant Act of 2014.  http://1.usa.gov/1sCPXn9

The House Oversight and Government Reform Committee will hold a hearing to discuss oversight of the National Park Service. http://1.usa.gov/25Yv1FD

The House Energy and Commerce Committee will hold a hearing to discuss the Federal Communication Commission's proposed privacy rules. http://1.usa.gov/1rd5WXN

The House Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing to discuss superbugs and the public health responses to antibiotic resistance. http://1.usa.gov/22YkR66

 

TOMORROW'S REGS TODAY:

The Obama administration will publish 167 new regulations, proposed rules, notices and other administrative actions in Tuesday's edition of the Federal Register.

--The Coast Guard will issue new safety regulations for tow boats.

Tow boats will be subject to new inspection standards as well as electrical and machinery requirements from the Coast Guard.

The new rule goes into effect in 30 days. http://bit.ly/1UMp6hx

--The Federal Aviation Administration (FAA) will issue new labeling requirements for portable oxygen concentrators (POC).

The requirements would apply to portable oxygen concentrators that people who have difficulty breathing take on airplanes.

The change will replace the current case-by-case approval of portable oxygen concentrators.

The changes go into effect on June 23. http://bit.ly/1WLXm07

--The Federal Reserve will consider new capital requirements for insurance companies.

The Fed will issue an advanced notice of proposed rulemaking for depository institution holding companies that are "significantly engaged in insurance activities."

The public has until Aug. 17 to comment. http://bit.ly/1XT0gkA

 

NEWS RIGHT NOW

Feds propose rule to help students sue colleges http://bit.ly/1U9HILE

FOIA reform heads to Obama's desk http://bit.ly/1tt1w0R

New bill would ban gun sales to those convicted of hate crimes. http://bit.ly/28zW5x9

House Dem to boycott moments of silence for victims of mass shootings. http://bit.ly/1ZM8MyO

Supreme Court rejects new challenge to Obama air pollution rule. http://bit.ly/21iTQsz

Supreme Court rules Puerto Rico can't restructure debt. http://bit.ly/1XSdcHj

Supreme Court rejects citizenship review for American Samoans. http://bit.ly/1rmujCt

Supreme Court says patent opinion won't open the gate for trolls http://bit.ly/24MUVtv

Oversight panel to vote on resolution to censure IRS chief http://bit.ly/1YodDaV

Advocates urge presidential candidates to protect net neutrality rules http://bit.ly/1YmUjdW

Chamber pushes Senate on energy reform http://bit.ly/1YmTQZo

Former GOP senator endorses Clinton after Orlando shooting http://bit.ly/1UPddor

What Metro could learn from private railroads (The Washington Post). http://wapo.st/1VVMk7h

 

BY THE NUMBERS 

$20 billion: Amount Puerto Rico owes in utility debts. 

$2 billion: Debt payment Puerto Rico has to make on July 1. 

The Supreme Court ruled Monday that Puerto Rico can't restructure the debts of its public utilities to avoid a financial crisis, closing off one of the island's last remaining options for avoiding default without help from Congress. http://bit.ly/1XSdcHj

  

QUOTE OF THE DAY

"I can't believe I'm endorsing Hillary ClintonHillary Diane Rodham ClintonThe Hill's Morning Report - Crunch time arrives for 2020 Dems with debates on deck The Memo: All eyes on faltering Biden ahead of first debate Trump says he's not prepared to lose in 2020 MORE for president, but I am," said former Sen. Larry Pressler (R-S.D.), who lamented that his party is acting "as though gun control shouldn't be part of the conversation." http://bit.ly/1UPddor

 

We'll work to stay on top of these and other stories throughout the week, so check The Hill's Regulation page (http://thehill.com/regulation) early and often for the latest. And send any comments, complaints or regulatory news tips our way, tdevaney@thehill.com or lwheeler@thehill.com. And follow us at @timdevaney and @wheelerlydia.

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