Education Dept. Wants To Make It Harder For Students Alleging Fraud To Secure Loan Forgiveness

What’s the story?

The Department of Education has begun circulating a new draft rule, increasing the burden of proof required for students to receive loan forgiveness if they say a school lied to them, and preventing state attorneys general from filing claims on behalf of groups of students who allege fraud by the same institution.

The prior rule, written by the Education Department under the Obama administration, instituted a "borrower rule" which only required a former student to provide proof of false advertising, and provide a “preponderance of evidence”. Education Secretary Betsy DeVos delayed implementation of that rule in order to rewrite it.

The new draft rule she began circulating in late December, which was reviewed by the Wall Street Journal, enforces a much higher legal threshold for proof. It requires students’ show an "intent to deceive" or that institutions knowingly provided false information with evidence that is “clear and convincing”.

Students would have to prove monetary harm, and they would only have three years from the date they "discovered, or reasonably should have discovered, the misrepresentation" to apply for loan forgiveness.

If the new rule is put in place it would affect any student loans secured after July 2019.

Critics of the proposed rule say it raises the burden of proof too high for private citizens without subpoena power to collect evidence. The administration says the prior rule was too vague and potentially too costly for taxpayers, whose money would pay off the loans deemed fraudulent.

Representatives of for-profit colleges, who would be most affected by the proposed rule, cheered the changes, saying it would make the adjudication process "clear, balanced and fair".

DeVos’ family has significant stake in for-profit college enterprises, though she divested herself of those assets when confirmed. President Trump also operated a for-profit university for years, which faced multiple legal challenges concerning accusations of fraud.

What do you think?

Do you support the new draft rule or not? Do you think it creates a "clear, balanced and fair" process, or does it increase the likelihood that students will be abused by predatory institutions and have no recourse?

Tell us in the comments what you think, then use the Take Action button to tell your reps!

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— Asha Sanaker

(Photo Credit: Gage Skidmore via Flickr / Creative Commons )