Cross-posted from Veterans Education Success

The Borrower Defense Rule gives the Education Department the authority to forgive federal student loans for students that prove their debt was incurred because they were defrauded by a school. It has been in place for over two decades. The Rule was clarified in late 20161 in the wake of the Corinthian Colleges closure by codifying a process for defrauded student loan borrowers to apply for loan forgiveness; limiting schools from using forced arbitration clauses and class action waivers on students; providing for automatic loan discharge for students at closed schools that do not complete their studies within three years of the school’s closure; authorizing group discharges when appropriate; and requiring schools at the highest risk of closing to set aside money to cover potential loan forgiveness, in order to protect taxpayers.

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