Education Secretary Delays Student Loan Borrower Defense Rules


10/25/2017 2:58 PM

The delay is the basis for ongoing legal action from 19 state attorneys general.

News

Once again, the U.S. Department of Education (DOE) delayed implementation of student loan borrower defense rules so that officials could write new regulations, according to CNBC.

Last year, the department, in coordination with President Barack Obama’s administration, created a new Student Aid Enforcement Unit with a Borrower Defense Group division providing legal analysis, support and advice related to claims of direct loan borrowers, ACA International previously reported.

The borrower defense rules, as well as the group, were designed to address claims by student loan borrowers that may have been defrauded by the school they were attending.

“The proposed regulations would create an improved process for borrowers who have been wronged, as well as create a process for group-wide loan discharges, which could be granted with or without applications from borrowers, when groups of students have been subject to misconduct,” according to a 2016 report from the DOE.

The rules were set to take effect in July 2017, yet the DOE announced the first delay in June.

“The department intends to develop fair, effective and improved regulations to protect individual borrowers from fraud, ensure accountability across institutions of higher education and protect taxpayers,” according to a news release issued by the department this summer.

As a result of the delay to implement the rules, 19 state attorneys general filed a lawsuit against the DOE and DeVos.

“Maryland Attorney General Brian Frosh, who co-led the coalition of attorneys general in the lawsuit against the department, said delaying the regulation will not save taxpayer dollars, but instead will cost the government even more money if the students default on their loans,” CNBC reports.

The DOE’s press secretary Liz Hill told CNBC the delay in the regulations will not impact processing relief claims from borrowers.

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