Tags: students | defraud | obama | rule | debt | relief

Court Unblocks Obama-era Student-Loan Rules in Blow to DeVos

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Tuesday, 16 October 2018 04:29 PM

A judge reportedly ruled on Tuesday that an Obama-era rule aimed at cancelling the debt of students defrauded by for-profit schools would go into effect immediately after repeated attempts by the Trump administration and the for-profit college sector to delay the regulation.

"Today's decision is a huge win for defrauded borrowers around the country," Julie Murray, an attorney at Public Citizen Litigation Group, told CNBC. "The rule is finally in effect. No more excuses. No more delays."

Judge Randolph D. Moss, a federal judge in Washington, D.C., denied on Tuesday an industry group's request to postpone the rule, CNBC reported. 

Now that the Obama-era regulation, known as borrower defense, is in effect, there is a clear process through which defrauded students can have their federal student loans cancelled. Certain students whose schools closed while they were enrolled will be entitled to an automatic discharge of their debt. In addition, schools that receive federal funding can't force their students into arbitration or require them to forgo class actions.

The move comes just days after the Education Department said Friday it will no longer try to delay the Obama-era regulation that helped students defrauded by for-profit colleges get their loans forgiven.

A federal court ruled last month that Education Secretary Betsy DeVos' decision to delay the regulation, known as borrower defense, was unlawful and that the rule should go into effect. The department had until next Tuesday to respond.

Department spokeswoman Liz Hill told the Associated Press that Secretary Betsy DeVos "respects the role of the court and will defer to its judgment in whether parts of the 2016 rule will go into effect."

Hill added that many parts of that rule "are bad policy" and the agency will continue working on a new rule that is fair to both students and taxpayers.

The rule would prohibit colleges from forcing students to sign away their right to sue the programs, would help some students get their loans discharged automatically and make borrowers eligible for forbearance when applying for loan discharges.

DeVos has criticized the Obama administration's regulations aimed at policing for-profit colleges as intrusive and unfair to taxpayers. She is now drafting new rules that she says will be more balanced and efficient.

Adam Pulver, an attorney with Public Citizen, one of the groups representing defrauded students in the lawsuit, hailed the decision.

"It's clear that the department has now recognized that there is no legitimate basis to delay this rule," Pulver said. "We are glad they are not pursuing another unlawful delay."

Meanwhile, another party to the case, an industry group representing for-profit colleges, has asked U.S. District Judge Randolph Moss to delay the Obama-era rule. The group, the California Association of Private Postsecondary Schools, did not immediately return a request for comment.

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A judge reportedly ruled on Tuesday that an Obama-era rule aimed at cancelling the debt of students defrauded by for-profit schools would go into effect immediately after repeated attempts by the Trump administration and the for-profit college sector to delay the regulation.
students, defraud, obama, rule, debt, relief
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2018-29-16
Tuesday, 16 October 2018 04:29 PM
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