Release of Department of Education’s Final Institutional Accountability Regulations
After two years of deliberation, public comment, and litigation, the Department of Education has released its final regulations for an overhaul of borrower defense to repayment claims. On August 30, 2019, the Department of Education released a press brief outlining new regulations set to take place on July 1, 2020. The new rules maintain that they are in place to create “streamlined and fair procedures that ensure basic due process for both borrowers and institutions.” Touting an anticipated savings of $11.1 billion dollars in savings to taxpayers over a ten-year span, the new regulations will likely make it more difficult for students to have their student loans forgiven. However, because of a missed deadline by the Department of Education, an Obama-era rule that favors borrowers by offering a transparent process for handling their claims, as well as automatic forgiveness of loans for some borrowers, is effective until that time.
Regulatory Rollbacks: Changing the Career Education System
In a world where students are swimming in debt, the Education Department has made an effort to regulate career education and ensure students receive a quality education. During the Obama Administration, rules were implemented that require educational institutions to prove they are preparing graduates for gainful employment. In addition, the borrower defense rule allows for federal student loan forgiveness when the student can prove their institution misled them relating to the loan or education services provided. With so many students in debt, what is the appropriate standard of review to apply when determining these regulations?
DeVos’ Deregulation Attempt Fails as Judge Upholds Borrower Defense Rules
A new set of student loan forgiveness regulations introduced earlier this year aimed to hack away at “borrower-defense” protections which shielded students from predatory loan practices by for-profit universities. Under Education Secretary Betsy DeVos, the Department of Education crafted new, more restrictive borrower-defense regulations after blocking an Obama Administration regulation from going into effect last year. U.S. District Court Judge Randolph Moss sided with consumer rights activists who argued against the Secretary of Education, alleging the Department of Education violated federal law and procedure by repealing the Borrower Defense to Repayment rule. The Trump Administration requested another opportunity to delay the regulations from taking effect, but Judge Moss has not yet ruled on their request.