The U.S. Secretary of Education, Betsy DeVos, motioned Wednesday to limit Obama administration loan forgiveness rules for students deceived by for-profit institutions, requiring that student borrowers show they are in difficult financial situations or prove that their colleges negligently deceived them.
The proposal, which is set to take effect next year, would “establish a federal standard for what constitutes “misrepresentation” on the part of institutions, requiring that claims show “reckless disregard” through false or deceptive claims. It would also impose penalties on institutions that show signs of poor financial health, such as a high number of loan defaults or court judgments,” according to The New York Times.
Betsy DeVos, U.S. Secretary of Education
In 2015-2016, the Obama administration excused hundreds of millions of dollars in student loans and started rewriting regulations to monitor predatory institutions and halt borrowers’ ability to look for debt relief from the federal government. However, colleges, including historically Black colleges and universities and for-profit professors, claimed the rules were too vague and subjected them to claims that carried substantial financial risks.
One month before the Obama administration’s rules were to begin, DeVos announced she would block and rewrite them.
The new rules within the proposal lay out “clear rules of the road for higher education institutions to follow” while “holding institutions, rather than hardworking taxpayers, accountable for making whole those students who were harmed by an institution’s practices,” DeVos said in a statement. “Our commitment and our focus has been and remains on protecting students from fraud.”