U.S. Sens. Debbie Stabenow (D-Lansing) and Gary Peters (D-Bloomfield Twp.) are calling on the President Trump administration to undo a rule that guts protections for defrauded or misled students seeking debt relief.
Stabenow and Peters urged U.S. Education Secretary Betsy DeVos to abandon the proposed rule in a letter to the department last week. The senators asked DeVos to resolve the backlog of current “borrower defense” claims, which, as of June, totals more than 5,600 student borrowers in Michigan.
Borrower defense is a federal student loan forgiveness program for students whose schools violated laws, or defrauded or misled student loan borrowers. In 2016, the former President Obama administration put in place a rule that held institutions accountable for paying back defrauded borrowers’ claims.
“Borrower defense is an important tool in the Department’s mission to protect students and taxpayer investments. Unfortunately, you have decided to stall relief for pending claims and to block future relief with a new rule,” wrote Stabenow and Peters.
In Michigan, the collapse for-profit colleges like Corinthian Colleges, Inc. and ITT Educational Services left tens of thousands of students in debt and “worthless credits and degrees” while costing taxpayers billions of dollars, according to the senators’ letter.
The senators state the rollback of protections is estimated to hold defrauded students accountable for the payment of 97% of all their student loans. The new rule eliminates more than $11 billion in relief for defrauded students, rolls back crucial protections, and narrows the definition of fraud.
“These changes will encourage bad actors to abuse students and put the interests of predatory colleges over those of hardworking Michigan students,” Stabenow and Peters wrote. “We urge the Department to immediately reverse course, preserve the 2016 borrower defense rule, and begin processing the backlog of claims it has already received.
The new regulations will take effect July 1, 2020. However, the regulations relating to financial responsibility will be effective immediately.