Borrower Defense to Repayment

Trump Vetoes Joint Resolution to Forgive Student Loan Debt

Written by Steve Rhode

It seems to get harder and harder to write posts about the Department of Education under Betsy DeVos that can stay apolitical.

Recently the members of the House and Senate passed a Joint Resolution of disapproval of the policies of the Trump Department of Education to make it hard to get partial or full forgiveness of federal student loan debt under the Borrower Defense to Repayment rules.

The Joint Resolution stated, “Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Department of Education relating to “Borrower Defense Institutional Accountability”.

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Department of Education relating to “Borrower Defense Institutional Accountability” (84 Fed. Reg. 49788 (September 23, 2019)), and such rule shall have no force or effect.”

The Senate vote is below.

In the House of Representatives, the vote was 225 Democrats and 6 Republicans for the resolution and 179 Republicans and 1 Independent against.

The rule the Department of Education and President Trump support makes it substantially harder for student loan debtors to get relief from fraudulent or deceptive practices of schools.

The rule summary says, “In the Final Regulations, the Department continues the presumption against full relief. Financial harm, as determined by the Department, is the amount of monetary loss that a borrower incurs as a consequence of a misrepresentation. Financial harm does not include damages for nonmonetary loss. The Final Regulations do not consider the act of taking out a Direct Loan, alone, as evidence of financial harm. Financial harm also cannot be predominantly due to intervening local, regional, or national economic or labor market conditions, nor can it arise from the borrower’s voluntary decision to pursue less than full-time work or not to work or result from a voluntary change in occupation. Evidence of financial harm may include, but is not limited to, the following circumstances: periods of unemployment upon graduation unrelated to national or local economic recessions; a significant difference between the amount of tuition and fees that the institution represented and the actual amount of tuition and fees; the borrower’s inability to secure employment in the field of study for which they were guaranteed employment by the institution; and the borrower’s inability to complete the program due to the institution no longer offering a requirement necessary for completion of the program.

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The Secretary will determine financial harm based upon individual earnings and circumstances; the Secretary may also consider evidence of program-level median or mean earnings in determining the amount of relief to which the borrower may be entitled, in addition to the evidence provided by the individual about that individual’s earnings and circumstances, if appropriate. The Department must have some information relating to the borrower’s career experience subsequent to enrollment at the institution. The goal is a proper resolution for each borrower defense claim, which requires evidence not only of an institution’s alleged misrepresentations, but also of the borrower’s reliance on that information in making an enrollment decision and monetary loss to the borrower as a result of the institution’s misrepresentation.” – Source

The End Result

Put politics aside. The end result here is more students are going to wind up having to repay in full, federal student loans that they incurred even though the schools they attended are latter found to have misled or misrepresented information the students relied on when enrolling. It’s complicated.

The ultimate responsibility lies with a wide variety of decision-makers. Both parents and students need to invest more time and energy to determine if the education they are buying will pay off and the claims made by the marketers from the school can be verified in advance.

Higher education needs to be more accountable as well to not use misrepresentation and partial truths to attract or sell students into debt for a defective product.

The Department of Education’s new ruling is flawed and leans in favor of the business of higher education.




About the author

Steve Rhode

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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