Trump and DeVos Stopping Student Loan Forgiveness From School Fraud

The Trump administration appears dead set on stopping federal student loan debtors from getting loan forgiveness as the result of fraud by the for-profit schools they had the misfortune to be enrolled with.

In July we learned the Department of Education under Secretary Betsy DeVos had not approved a single Borrower Defense to Repayment claim since they took office. The Borrower Defense to Repayment program was enhanced during the Obama administration to allow students who were on the receive end of fraud a way to get out from under those loans. Most of those loans were to now closed for-profit schools.

The program was described by the Obama administration by saying, “Under the law, you may be eligible for borrower defense to repayment forgiveness of the federal student loans that you took out to attend a school if that school misled you, or engaged in other misconduct in violation of certain state laws.” – Source

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While DeVos and Trump had tipped their hand on neutering Borrow Defense to Repayment, today they laid it all out on the table.

Politico is reporting, “Education Secretary Betsy DeVos this week will formally undertake a pair of regulatory moves designed to make sure that the “borrower defense to repayment” regulations finalized by the Obama administration won’t see the light of day while the Trump administration works on its own version of the rules during the next couple of years. The regulations aimed to make it simpler for defrauded students to have their student loan debt wiped clean, and took other steps as well, such as giving the Education Department new powers to go after schools it deemed financially risky.” In the meantime, injured student debtors will be expected to continue to make payments.

It looks like this is all about stiffing consumers by not holding schools accountable for their bad acts. As Politico says, “The Trump administration estimates that by delaying the Obama-era regulations by a year, it’ll save taxpayers $37.7 million – and says the further delay will save another $46.1 million.”

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It seems this ploy to delay or eliminate the authority for student loan debtors to get relief from their loans stems back to not holding for-profit schools accountable. On May 24, 2017 the California Association of Private Postsecondary Schools (CAPPS) sued the Department of Education to prevent rules going into force that would hold the for-profit schools accountable for making sure students were actually able to achieve the employment opportunities the schools were holding out. This would prevent students from being misled by schools receiving federal student loans from selling education that turned out later to be less than promoted.

Politico is reporting, “the department will issue an “interim final rule” that, effective Tuesday, delays the rules until July 1, 2018. The Trump administration said the immediate delay is needed because of the uncertainty of what might happen with its initial postponement, which was pegged to the outcome of a legal challenge to the rules brought by a for-profit college group. “Given the legal uncertainty, maintaining the status quo is critical,” the department said in the notice, warning of “substantial injuries that could result” if the Obama-era regulations were allowed to take effect.”

I think most consumers could raise a very valid question wondering who the Department of Education is trying to protect here. Is it deceptive schools selling overpriced education or deceived student loan debtors?

I would challenge any reader to find me any action the Trump Department of Education has taken to introduce any program or rule that will assist or benefit federal student loan debtors from this crushing debt.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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