Should Congress Overturn the Trump Admin’s Changes to the Student Borrower Loan Forgiveness Rule? (S. Joint Res. 56)

What is S. Joint Res. 56?

(Updated September 29, 2020)

This resolution would repeal the Dept. of Education’s “Borrower Defense Institutional Accountability” rule that was finalized on September 23, 2019, and would take effect on July 1, 2020. The regulation modifies an Obama era rule that allowed student borrowers to seek forgiveness of student loans if a higher education institution misled them or engaged in other misconduct in violation of the law. The new rule would narrow the window for filing such claims to three years after graduation or withdrawal; extend the window for students to obtain relief if they can’t complete their programs before a school closes from 120 days to 180 days; allow students to allege a specific amount of financial harm that may be greater or lesser than their original claim; reduce precipitous closures by encouraging institutions to close only after completing well-planned teach-outs which give students a reasonable opportunity to finish their programs; maintain the current preponderance of evidence standard; and rescind the current prohibition on mandatory arbitration agreements.

Under the Congressional Review Act, Congress can overturn regulations issued within the last 60 legislative days with simple majority votes in both chambers. The resolution would need to be signed into law by the president to take effect.

Argument in favor

The Trump administration’s changes to the borrower defense rule will make it harder for student loan borrowers to obtain loan forgiveness when higher education institutions engage in fraudulent behavior. By blocking the regulatory changes proposed by the Education Dept. and Secretary DeVos, this bill would restore the protections of the Obama era borrower defense rule.

Argument opposed

The Trump administration’s new regulation would revise the borrower defense rule in a way that gives student borrowers a reasonable chance to file for and obtain loan forgiveness when higher education institutions defraud them or engage in illegal conduct, and also protect taxpayers by ensuring loans are repaid when conditions merit. Congress shouldn’t overturn the new rule.

Impact

Student borrowers seeking forgiveness of student loans from institutions that misled them or engaged in illegal conduct; relevant higher education institutions; and the Dept. of Education.

Cost of S. Joint Res. 56

A CBO cost estimate is unavailable. The Dept. of Education estimates that the regulation would produce a net savings of $11.1 billion to taxpayers in the 2020-2029 loan cohorts, including $9.8 billion for changes to the defense to repayment provisions and $1.3 billion for changes related to closed school discharges.

Additional Info

In-Depth: Sen. Dick Durbin (D-IL) introduced this bill to block the Trump administration’s planned reforms to the borrower defense rule, which allows student loan borrowers to obtain loan forgiveness if their higher education institution defrauded them or engaged in illegal conduct:

“With this new rule, Secretary DeVos is saying to borrowers, ‘We are not on your side. You are on your own.’ I’m asking my colleagues on both sides of the aisle: put the party labels outside… stand up for students across America who did their best to get a college education and were deceived in the process. Stand up for students who are loaded up with student debt, which could destroy their lives, and give them a fighting chance for a future by saying that Secretary DeVos’ borrower defense rule is unfair to veterans, unfair to students, and unfair to American families.”

In a press release announcing the final regulation revising the borrower defense rule, Secretary of Education Betsy DeVos offered the following statement:

“If a school defrauds students, it must be held accountable. There is no place for fraud in higher education, and it will not be tolerated by this Administration. From the recent college admissions scandal and intentional misrepresentations by schools to boost their U.S. News & World Report rankings to fraudulent marketing practices from proprietary institutions, too many institutions of higher learning are falling short. The new regulations are aimed at preventing this behavior because students deserve better, and all institutions must do better. I called for this regulatory reset more than two years ago, as it became clear the old rules just weren’t working. I want to thank all those who provided thoughtful feedback during the process. We made substantive changes to our proposed rule based on your input. We believe this final rule corrects the 2016 rule through common sense and carefully crafted reforms that hold colleges and universities accountable and treat students and taxpayers fairly.”

This legislation has the support of 42 cosponsors, all of whom caucus as Democrats. The House passed its version of this legislation on a mostly party-line vote of 231-180 in January 2020.

Media:

• Sponsoring Sen. Dick Durbin (D-IL) Press Release

• Federal Register - Borrower Defense Institutional Accountability Rule

• American Council on Education (Opposed)

• Countable (House Version)

• Countable - Congressional Review Act (Context)