Rules to help defrauded students clear loans being revised – California News

Rules to help defrauded students clear loans being revised – California News



WASHINGTON >> The Education Department announced Wednesday that it will change two key Obama-era rules governing student loan forgiveness in cases involving fraud and misconduct by universities.

The department said it will convene special committees to rewrite Borrower Defense to Repayment and Gainful Employment regulations.

The rules were introduced last year as the department was processing claims from thousands of students who say there were defrauded by for-profit colleges.

Under the borrower defense rules, students could have their loans erased if their college misrepresented the quality of its programs or broke a “contractual promise” with its students. The gainful employment rule was designed to ensure that graduates would be able to earn enough money to pay off their student loan debt.

DeVos said in a statement Wednesday that the regulations were “overly burdensome and confusing” and need to be streamlined.

“The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs,” DeVos said.

She said many colleges have complained that the definition of misrepresentation and breach of contract is too broad and that institutions lacked meaningful due process. The Education Department will conduct hearings on the regulations in July.

“It is the department’s aim, and this administration’s commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow,” DeVos said.

She added that nearly 16,000 defense claims that…

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