DeVos issues new loan forgiveness rule for defrauded trainees

by | Sep 10, 2019 | Debt Relief | 1 comment

Education Secretary Betsy DeVos late Friday issued a new rule on loan forgiveness for trainees defrauded by their colleges, a reword of Obama-era policies that supporters say will make it tougher for trainees to get relief.

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DeVos stated schools must be held responsible but the Obama rule wasn’t working. The new rule, she stated, will “deal with trainees and taxpayers fairly.”

Loans released on July 1, 2020, or later would be affected by the new guideline. The department approximates it will result in a net cost savings of $111 billion over 10 years of loans.

DeVos’ reword of the so-called customer defense to payment rule is the most recent in the Trump administration’s campaign to downsize Obama-era policies targeting for-profit colleges. It likewise rescinded a 2014 rewarding employment rule that aimed to cut off federal financing to programs that consistently left graduates with high student financial obligation that they would be not able to settle.

” With this policy overhaul, Secretary DeVos has cemented her tradition as friend to predatory colleges and enemy to the students they dupe,” Yan Cao, a fellow at The Century Fund, said in a declaration.

The 2016 customer defense guideline was taken into place after the closure of Corinthian Colleges, which left countless trainees with trainee loan financial obligation and absolutely nothing to reveal for it. DeVos froze the rule while it was being rewritten, however a federal judge ruled that the hold-up was unlawful.

” There is no place for scams in greater education, and it will not be endured by this administration,” DeVos said.

However James Kvaal, president of The Institute for College Gain Access To and Success, said the brand-new guideline will make it more hard for trainees defrauded by their schools to get relief.

Trainees, he said, would be required “to send proof that trainees do not have and can not get” and submit their claims as people, instead of as part of a group that was defrauded.

There also would be a three-year limitation on submitting a claim, either from the date of a student’s graduation or the school’s closure. “That will weed out about 30 percent of claims that would otherwise prevail,” Kvaal said, pointing out the department’s own quotes.

” By leaving trainees on the hook for colleges’ unlawful actions, today’s rule sends out a clear message that there will be little or no consequences for going back to the misrepresentations and deceptions that characterized the for-profit college boom,” he said.

Profession Education Colleges and Universities, which represents dozens of for-profit colleges, supports the reword, stated Michael Dakduk, the company’s executive vice president. “We think it offers fairness and due procedure to all parties involved,” he said.

Dakduk pointed to the guideline’s provisions motivating schools dealing with closure to close down just after “teach-outs” designed to enable students to complete their programs. “We definitely valued how the department is focusing on school completion,” he said.

Students would be able to pick between taking part in the teach-out or submitting a closed school claim with the department.

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