DeVos moves to tighten rules for student loan debt relief
WASHINGTON — Education Secretary Betsy DeVos has moved to make it harder for students who say they were defrauded by colleges to erase their debts, rolling back Obama-era regulations that for-profit colleges saw as threatening their survival.
The proposed rules published Wednesday require students to prove schools knowingly deceived them if they want their federal loans canceled.
And it scuttled an Obama administration provision that allowed similar claims to be processed as a group. Instead, students will have to prove their claims individually.
The rules are DeVos’ rewrite of an Obama-era regulation published in 2016 and part of that administration’s crackdown on for-profit colleges that critics say prey on vulnerable students. In ways big and small, the new version makes it harder for students to win debt forgiveness. “Postsecondary students are adults who can be reasonably expected to make informed decisions and who must take personal accountability for the decisions they make,” said the proposed regulation, which was posted online Wednesday.
Still, DeVos said in a statement, “Our commitment and our focus has been and remains on protecting students from fraud.”
The Education Department punted for now on one key question: whether students must be in default in order to apply for loan forgiveness. Allowing “affirmative claims” from students who are current on their loan payments could invite a flood of applications, the agency warned, because there is little downside to asking for loan forgiveness. At the same time, the Education Department said, it does not want to create incentives for borrowers to fall into default in hopes of winning debt relief.
The department said it wants feedback on the matter. But it said that if claims are permitted from people not in default, they may be required to meet a higher burden of proof. In general, the agency is suggesting that applicants prove their case with a “preponderance of evidence,” the same standard used by the Obama version. But the department said it was considering the tougher standard of “clear and convincing” evidence in the case of claims from people not in default, if those are allowed.
The department aims to publish a final rule by Nov. 1 so that it can take effect for loans originating after July 1, 2019. The agency will allow 30 days for public comments on the proposal.