U.S. Department of Education Announces Plan to Improve Student Loan Regulations

6/15/2017 2:50 PM

Two new committees on Borrower Defense to Repayment and Gainful Employment will be established as part of the rulemaking process.


Under the leadership of Education Secretary Betsy DeVos, the U.S. Department of Education will take the key step in improving rules by setting up rulemaking committees on Borrower Defense to Repayment and Gainful Employment regulations.

“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,” a news release issued by the department said.

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.

In one of its reports dated June 2016, the department’s former Special Master Joseph A. Smith detailed the number and status of borrower defense claims, including those of former Corinthian College students who may be eligible for relief, ACA reported.

“[The department] established the borrower defense program to enhance its ability to address claims by borrowers seeking relief from unlawful practices by institutional participants in its student loan programs,” Smith said in his report last year.

However, now, due to pending litigation challenging the Borrower Defense to Repayment regulations, the department “is postponing the effective date pursuant to section 705 of the Administration Procedures Act. While negotiated rulemaking occurs, the department will continue to process applications under the current borrower defense rules,” according to the news release issued Wednesday.

The department reports it is currently processing nearly 16,000 borrower defense claims.

“We are working with servicers to get these loans discharged as expeditiously as possible,” DeVos said in the news release. “Some borrowers should expect to obtain discharges within the next several weeks.”

In addition to the review of Borrower Defense to Repayment rules, the department will convene a rulemaking committee on Gainful Employment. “As the department worked on implementing this regulation, it became clear that, as written, it is overly burdensome and confusing for institutions of higher education,” according to the news release.

The department plans to publish the Notice of Intent to Conduct Negotiated Rulemaking on Borrower Defense to Repayment and Gainful Employment in the Federal Register on June 16. It will also conduct public hearings on Borrower Defense to Repayment, July 10 in Washington, D.C., and Gainful Employment on July 12 in Dallas.

ACA International will continue to follow the department’s student loan rulemaking process.

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