October 08, 2019

Senator Warren Joins Senator Durbin, Representative Lee in Congressional Effort to Overturn DeVos Borrower Defense Rule

Lawmakers Urge Education Department Not to Reward Student Loan Servicer’s Blatant Disregard for Borrowers, Taxpayers, and the Law

Boston, MA - United States Senator Elizabeth Warren (D-Mass.), Senate Democratic Whip Dick Durbin (D-Ill.) and U.S. Representative Susie Lee (D-Nev.) today led the introduction of a Congressional Review Act (CRA) resolution of disapproval of the Department of Education’s rewritten borrower defense rule that gutted essential protections for defrauded student borrowers and taxpayers. CRA resolutions of disapproval allow Congress to overturn regulatory actions of federal agencies with a simple majority vote in both chambers. Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee Patty Murray (D-Wash.) and Chairman of the House Education and Labor Committee Bobby Scott (D-Va.) also joined as co-sponsors of the resolution.

 “Since the day she took office, Betsy DeVos has been boosting her friends in the for-profit college industry at the expense of America’s students,” said Senator Warren. “Congress needs to step up and block DeVos from rolling back more essential protections.”

“This rule is another Trump-DeVos giveaway to the notorious for-profit colleges at the expense of defrauded student borrowers. Senators will now have a chance to go on the record: Are you with the students or the predatory industry that defrauded them with worthless degrees and a lifetime of debt?” said Senate Democratic Whip Durbin.

“Student loan borrowers deserve financial protection when they are defrauded or cheated by their schools—it’s as simple as that. The original 2016 Borrower Defense Rule was a commonsense policy meant to level the playing field between students and the predatory colleges taking advantage of them. But Secretary DeVos’s new rule makes the process of applying for and granting borrower defense forgiveness unnecessarily difficult and burdensome for the students who we are supposed to be protecting.  The original Borrower Defense Rule was projected to secure $17 billion in relief for defrauded students by 2020. According to the Department of Education’s own estimates, the new DeVos rule is expected to garner only a fraction of that. Our bicameral bill overturns this harmful new rule and maintains the original, pro-student Borrower Defense Rule. Instead of easing regulations and oversight on predatory for-profit schools, we need to stand up for students and open up quality, affordable opportunities in education for everyone,” said Representative Lee.

“Student loan borrowers who have been cheated out of their educations should have the Department of Education’s support, but Secretary DeVos is once again siding with predatory, for-profit colleges instead—giving them a free pass and costing struggling students billions in debt relief. This is backwards and unconscionable, and I hope every senator will join us in sending a clear message to the Secretary that this won’t stand,” said Ranking Member Murray.

“The Education Department’s Borrowers’ Defense rule will deny defrauded students billions of dollars in relief and shield predatory schools from accountability. The rule erects unnecessary barriers to students, exposes taxpayers to significant risk, and sends an alarming message that schools can cheat students out of a quality education and still reap the rewards of federal student aid. Through the Congressional Review Act, Congress has the authority to reverse this harmful rule and restore the consumer protections that students deserve. We must exercise that authority and stand with students and taxpayers against predatory institutions,” said Chairman Scott.

A copy of today’s Senate resolution of disapproval is available here.  A copy of today’s House resolution of disapproval is available here.

Durbin was joined in introducing the resolution in the Senate by Democratic Leader Chuck Schumer (D-N.Y.), HELP Ranking Member Patty Murray (D-Wash.), and Senators Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Sherrod Brown (D-Ohio), Tom Carper (D-Del.), Bob Casey (D-Pa.), Chris Coons (D-Del.), Catherine Cortez Masto (D-Nev.), Tammy Duckworth (D-Ill.), Dianne Feinstein (D-Calif.), Kirsten Gillibrand (D-N.Y.), Kamala Harris (D-Calif.), Maggie Hassan (D-N.H.), Mazie Hirono (D-Hawaii), Doug Jones (D-Ala.), Amy Klobuchar (D-Minn.), Patrick Leahy (D-Vt.), Ed Markey (D-Mass.), Robert Menendez (D-N.J.), Jeff Merkley (D-Ore.), Chris Murphy (D-Conn.), Jack Reed (D-R.I.), Jackie Rosen (D-Nev.), Bernie Sanders (I-Vt.), Brian Schatz (D-Hawaii), Jeanne Shaheen (D-N.H.), Tina Smith (D-Minn.), Debbie Stabenow (D-Mich), Chris Van Hollen (D-Md.), Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.), and Ron Wyden (D-Ore.).

Secretary DeVos’ borrower defense rule makes it more difficult for borrowers who are defrauded by their schools or harmed by their schools’ closure to receive the relief to which they are entitled, and which Congress intended, under the Higher Education Act (HEA). Specifically, the DeVos rule:

  • Cuts $11.1 billion in expected relief to students compared to the original 2016 rule, which is currently in effect, by making it more difficult for borrowers to obtain relief;
  • Increases the burden on defrauded borrowers to gather and submit evidence to prove their claims, including that the school intentionally harmed them, which is often impossible to obtain;
  • Requires borrowers to apply individually for relief rather than receiving automatic discharges when a group of borrowers has been harmed by widespread fraud or misconduct;
  • Establishes a statute of limitations on claims—expiring three years after leaving school—despite the fact that a school’s misconduct often doesn’t become known until many years later;
  • Eliminates judgments against a school for misconduct as a sufficient ground for a borrower to receive a discharge;
  • Eliminates the 2016 rule’s prohibition on class action bans and mandatory arbitration clauses—practices used by the for-profit college industry to prevent students from suing a school for misconduct in court;
  • Eliminates the ability for a borrower whose claims are denied to have their claims reconsidered with new evidence; and
  • Eliminates the automatic closed school discharge provision from the 2016 rule for schools that close after July 1, 2020—a provision that requires automatic discharge of loans for any borrower who has not enrolled in another institution of higher education within three years of the school’s closure. This provision resulted in automatic closed school discharges for more than 7,000 ITT Tech student borrowers just last month.

Senator Warren has long advocated for the rights of students cheated by for-profit colleges to have their federal student loans cancelled, tax free. In 2014, Senator Warren forced the Department of Education to acknowledge that students defrauded by their colleges had a right to debt cancellation and launched an initiative to urge the Department to provide that relief. Through public letters, staff investigations, public awareness campaigns and coordination with state officials, Warren urged more and faster relief for cheated students. To date, the Education Department has announced student loan cancellations for more than 28,000 former students across the country cheated by Corinthian Colleges, more than 7,000 students affected by ITT Tech’s closure, and some 4,500 Massachusetts students cheated by the American Career Institute. 

Senator Warren continues to make oversight of the Education Department a top priority as part of an initiative known as “DeVos Watch.” You can find more information on her website here.

 

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