For well over a year, lawmakers, law enforcement, advocates and scammed students alike have been pressuring the Department of Education to relieve the staggering debt of students who attended for-profit colleges like Corinthian which broke the law. In response, the Department convened a negotiated rulemaking session to clarify what the process would be going forward for students who were victims of illegal acts by their school, and wanted to assert their legal right to a “defense to repayment,” or debt cancellation.
But as outlined in a letter delivered this week and signed by 34 organizations, the Department’s draft of the proposed regulations has moved in the wrong direction. Among the worst items of their proposal is a requirement that defrauded borrowers seek debt cancellation within two years — or lose eligibility. This is particularly troubling because there is no limit on the number of years the government can collect on the student debt.
The letter suggests that the Department eliminate the two-year statute of limitations on debt relief, provide automatic discharges when there is sufficient evidence of wrongdoing, and prohibit the schools from denying students their right to a day in court with forced arbitration clauses.
The coalition letter comes on the heels of two letters from lawmakers to the President. On March 9th, a full thirty-five U.S Senators called on the President to ensure his Administration doesn’t make the lives of students conned by for-profit colleges even harder by moving forward with the Department’s flawed proposal. The letter was led by Senate HELP Committee Ranking Member Patty Murray, Elizabeth Warren, Richard Blumenthal and Assistant Minority Leader Dick Durbin. The Senators were also joined by the Ranking Member on the Education & Workforce Committee in the House, Bobby Scott and the Ranking Member on the House Financial Services Committee, Maxine Waters, with their own letter.
The lawmakers were amplifying an even earlier chorus of critics of the Department’s proposed regulations, including the California State Attorney General Kamala Harris, and the National Consumer Law Center, who’d both previously outlined the same concerns with the Department’s proposal as raised in the coalition letter.
The Department meets on March 16th for its final three-day negotiated rulemaking session on the proposed rules for defense to repayment. Time will tell if the Department will forge ahead with their proposal that would lock too many scammed students out of relief, or heed the call in the advocates’ letter to provide “fair and common-sense relief to defrauded borrowers and better hold institutions accountable for their actions.”