DeVos Hits Pause On Student Loan Help

Written by Law Clerk Angelo Banks and Terry Lawson

Hamza Butt via Flickr

After college graduation most graduates are faced with one common problem: paying back their student loans. There are usually two big reasons student loans are tough to pay back. First, borrowers often aren’t earning enough income at their post-graduation jobs. And second, many borrowers can’t find work in the fields of study for which they went into debt to pursue. Many schools were complicit, promising good jobs in fields of study that students either weren’t qualified for or in which graduates couldn’t realistically expect employment.

The Obama Administration addressed this problem by issuing regulations that have become known as the “borrower defense” and “gainful employment” rules. These rules allow a student to apply for an administrative discharge of their federal student loans if there is proof the student was cheated by the schools that took the federal loan money. These rules also work to cut off federal funding and loans at schools whose graduates are not being employed in the degree fields or who do not earn enough money to pay off their student debt.

The new rules were set to take effect on July 1, 2017. But, Education Secretary Betsy DeVos and the Trump Administration decided to hold up the process and seek further comment to protect the very schools that are doing the most harm. This may have been in part a reaction to the lawsuit filed in May of this year by a group of California private and for-profit schools who felt the rules were unfair. And more likely this is a political attempt to reduce the impact on the corporations that Secretary DeVos seems to favor.

There are thousands of college borrowers that are suffering because of the false promises made by many schools. Now, those borrowers have to endure more of the embarrassing and harassing phone calls, collections actions, lawsuits etc. that come along with not being able to pay outrageous student loan payments. Schools that cannot prove economic value from the student loan program ought to be pushed away from the trough of unlimited student loan money. But apparently, Secretary DeVos wants to reset these rules because she thinks the the Department missed a chance to get things right.

Borrowers should stay up-to-date with this process. Many states have already sued Secretary DeVos and the Department to undo her pause. Student borrowers should join in and make it known that these regulations are sorely needed. Otherwise the “reset” that Secretary DeVos wants will remain permanent. Despite what Secretary DeVos says, it’s not the institutions that are being treated unfairly. It’s the students.

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