Student debt relief rule sent to the WH for final review

Student debt relief rule sent to the WH for final review
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An Education Department regulation to streamline relief for students defrauded by their school is in its final review stages.

The agency sent the defense to repayment rule to the White House Office of Management and Budget on Monday. The department has said it expects to release a final rule sometime in November.

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The regulation is the administration’s response to the May 2015 collapse of Corinthian Colleges. The for-profit school left more than 70,000 students in the lurch when it filed for bankruptcy and closed its doors shortly after the department issued it a $30 million fine for defrauding students.

As a result of the closure, which included Everest Institute, Wyotech and Heald College, the department said it received thousands of claims for student loan debt relief from former students.

The department said it quickly learned that the process for getting students relief was outdated and significant changes were needed to better protect students and taxpayers.

While the rule aims to give student borrowers a clear, fair and transparent process to seek debt relief, for-profit schools claim the regulation is unfairly punitive because it requires schools to provide a letter of credit every time a lawsuit is filed against it. Schools would also have to notify current and prospective students that it has cash on hand to make repayments if forced to close.