Numerous investigations by state and federal law enforcement, including a bipartisan 49 state Attorneys General settlement with Career Education Corporation (Perdecho), and a record-breaking settlement between the University of Phoenix and the FTC, both in 2019, have detailed widespread misconduct and lies by schools that preyed on students’ dreams of improving their lives through education but instead left them with worthless degrees and thousands of dollars in student loan debt. Corinthian Colleges and ITT Tech are examples: the schools deceived students by providing false information about the value of their degrees, all while raking in billions in student aid dollars before abruptly closing.
The 2016 “Borrower Defense” rule protected students and taxpayers by:
- Creating a process for defrauded borrowers to apply for loan forgiveness they are entitled to seek under the Higher Education Act;
- Ensuring students at closed schools get the relief afforded them under law by automatically forgiving their loans if they do not complete their studies; and
- Protecting students and taxpayers by requiring the riskiest schools to warn students and to put money aside to cover the cost if their students’ loans are forgiven.
The 2019 DeVos rule makes it virtually impossible for students to obtain loan forgiveness or taxpayers to recover against predatory colleges. The rule:
- Makes it impossible for students to seek forgiveness even when the misconduct is not discovered or made public for several years.
- Requires every student to pursue forgiveness individually even if the school’s misconduct is the same.
- Makes it impossible for students at closed schools to automatically have loans forgiven.
- Requires students to demonstrate harm above and beyond the student loans.
Borrower Defense Media Coverage
- Judge rejects settlement over stalled student debt relief claims, blames DeVos for harming borrowers Washington Post October 20, 2020
- ITT Loan Servicer Agrees to Forgive $330 Million Inside Higher Ed September 16, 2020
- $5.6m in debt erased for former Mass. ITT Tech students Boston Globe September 15, 2020
- The Students Are Victims of Fraud, but the Government Won’t Help The New York Times July 10, 2020
- House Fails to Override Trump’s Veto Limiting Student Loan Debt Relief The New York Times June 26, 2020
Borrower Defense Posts
- Top 10 Ways the New Borrower Defense Rule is Worse for Borrowers
- Defrauded Students Left Holding the Bag Under Final “Borrower Defense” Rule
- The Borrower Defense Rule and Its Importance to Veterans
Who Supports Borrower Defense
- Coalition Letter from 80 Organizations to Secretary DeVos Urging the Department to Implement a Strong Borrower Defense Rule
- Coalition Letter 27 Veterans Organizations Seeking Strong Borrower Defense Rule
- 57 organizations released a letter supporting the Durbin-Lee efforts so that students who were fraudulently deceived or whose schools engaged in other illegal conduct can access relief from their student debts
- 37 Veterans and Military Service Organizations write Congress to share our priorities for Higher Education Act reauthorization