Durbin, Lee Lead Congressional Effort To Overturn Devos Borrower Defense Rule
New Rule Eliminates More Than $11 Billion In Relief To Defrauded Borrowers And Guts Critical Borrower Protections
WASHINGTON – U.S. Senator Dick Durbin (D-IL) and U.S. Representative Susie Lee (D-NV-03) today led the introduction of a Congressional Review Act (CRA) resolution of disapproval on Department of Education Secretary Betsy DeVos’ rewritten borrower defense rule that gutted essential protections for student borrowers and taxpayers. CRA resolutions of disapproval allow Congress to overturn regulatory actions of federal agencies with a simple majority vote in both chambers. A time for consideration of the resolutions on the floor of each chamber will be coordinated with House and Senate leadership.
“This rule is another Trump-DeVos giveaway to the notorious for-profit colleges at the expense of defrauded student borrowers. Senators will now have a chance to go on the record: Are you with the students or the predatory industry that defrauded them with worthless degrees and a lifetime of debt?” Senator Durbin said.
“Student loan borrowers deserve financial protection when they are defrauded or cheated by their schools—it’s as simple as that. The original 2016 Borrower Defense Rule was a commonsense policy meant to level the playing field between students and the predatory colleges taking advantage of them. But Secretary DeVos’s new rule makes the process of applying for and granting borrower defense forgiveness unnecessarily difficult and burdensome for the students who we are supposed to be protecting. The original Borrower Defense Rule was projected to secure $17 billion in relief for defrauded students by 2020. According to the Department of Education’s own estimates, the new DeVos rule is expected to garner only a fraction of that. Our bicameral bill overturns this harmful new rule and maintains the original, pro-student Borrower Defense Rule. Instead of easing regulations and oversight on predatory for-profit schools, we need to stand up for students and open up quality, affordable opportunities in education for everyone,” Representative Lee said.
“Student loan borrowers who have been cheated out of their educations should have the Department of Education’s support, but Secretary DeVos is once again siding with predatory, for-profit colleges instead—giving them a free pass and costing struggling students billions in debt relief. This is backwards and unconscionable, and I hope every senator will join us in sending a clear message to the Secretary that this won’t stand,” said Senator Patty Murray, ranking member of the Senate Committee on Health, Education, Labor and Pensions (HELP).
“The Education Department’s Borrowers’ Defense rule will deny defrauded students billions of dollars in relief and shield predatory schools from accountability,” said Representative Bobby Scott (VA-03), Chairman of the Education and Labor Committee. “The rule erects unnecessary barriers to students, exposes taxpayers to significant risk, and sends an alarming message that schools can cheat students out of a quality education and still reap the rewards of federal student aid. Through the Congressional Review Act, Congress has the authority to reverse this harmful rule and restore the consumer protections that students deserve. We must exercise that authority and stand with students and taxpayers against predatory institutions.”
Durbin was joined in introducing the resolution in the Senate by Senators Chuck Schumer (D-NY), Patty Murray (D-WA), Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Cory Booker (D-NJ), Sherrod Brown (D-OH), Tom Carper (D-DE), Bob Casey (D-PA), Chris Coons (D-DE), Catherine Cortez Masto (D-NV), Tammy Duckworth (D-IL), Dianne Feinstein (D-CA), Kirsten Gillibrand (D-NY), Kamala Harris (D-CA), Maggie Hassan (D-NH), Mazie Hirono (D-HI), Doug Jones (D-AL), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Ed Markey (D-MA), Robert Menendez (D-NJ), Jeff Merkley (D-OR), Chris Murphy (D-CT), Jack Reed (D-RI), Jackie Rosen (D-NV), Bernie Sanders (I-VT), Brian Schatz (D-HI), Jeanne Shaheen (D-NH), Tina Smith (D-MN), Debbie Stabenow (D-MI), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), Gary Peters (D-MI), and Tim Kaine (D-VA).
Lee was joined in introducing the resolution in the House by Representatives Robert C. Scott (D-VA-03), Rosa De Lauro (D-CT-03), Susan A. Davis (D-CA-53), Raul M. Grijalva (D-CA-03), Joe Courtney (D-CT-02), Marcia L. Fudge (D-OH-11), Gregorio Kilili Sablan (MP), Frederica S. Wilson (D-FL-24), Suzanne Bonamici (D-OR-01), Mark Takano (D-CA-41), Alma S. Adams (D-NC-12), Mark DeSaulnier (D-CA-11), Donald Norcross (D-NJ-01), Pramila Jayapal (D-WA-07), Susan Wild (D-PA-07), Lucy McBath (D-GA-06), Kim Schrier (D-WA-08), Lauren Underwood (D-IL-14), Jahana Hayes (D-CT-05), Donna E. Shalala (D-FL-27), Andy Levin (D-MI-09), Ilhan Omar (D-MN-05), David Trone (D-MD-06), Haley Stevens (D-MI-11), Lori Trahan (D-PA-03), Joaquin Castro (D-TX-20), Adriano Espaillat (D-NY-13), Mark Pocan (D-WI-02), Emanuel Cleaver (D-M0-05), Cheri Bustos (D-IL-17), Barbara Lee (D-CA-13), Danny Davis (D-IL-07), Ed Case (D-HI-01), Sylvia Garcia (D-TX-29), Seth Moulton (D-MA-6), Kurt Schrader (D-OR-5), Lois Frankel (D-FL-21), Jerry Nadler (D-NY-10), William Lacy Clay (D-MO-1), Ayanna Pressley (D-MA-7), Mary Gay Scanlon (D-PA-5), Jan Schakowsky (D-IL-9), Pete Visclosky (D-IN-1), Ruben Gallego (D-AZ-7), Abby Finkenauer (D-IA-1), Kathy Castor (D-FL-14), Bill Pascrell (D-NJ-9), Bonnie Watson Coleman (D-NJ-12), Rashida Tlaib (D-MI-13), Cedric Richmond (D-LA-2), Katie Porter (D-CA-45), Anna Eshoo (D-CA-18), Albio Sires (D-NJ-8), Debbie Dingell (D-MI-12), David Cicilline (D-RI-1), Grace Meng (D-NY-6), Ben Ray Luján (D-NM-3), and Peter Welch (D-VT-At Large).
The DeVos borrower defense rule makes it more difficult for borrowers who are defrauded by their school or harmed by their school’s closure to receive the relief to which they are entitled, and which Congress intended, under the Higher Education Act (HEA). Specifically, the DeVos rule:
- Cuts $11.1 billion in expected relief to students compared to the 2016 rule, currently in effect, by making it more difficult for borrowers to obtain relief;
- Increases the burden on defrauded borrowers to gather and submit, often impossible to obtain, evidence to prove their claim including that the school intentionally harmed them;
- Requires borrowers to apply individually for relief rather than receiving automatic discharges when a group of borrowers has been harmed by widespread fraud or misconduct;
- Establishes a statute of limitations on claims—expiring 3 years after leaving school—despite the fact that a school’s misconduct often doesn’t become known until many years after it;
- Eliminates judgments against a school for misconduct as a sufficient ground for a borrower to receive a discharge;
- Eliminates prohibition on class action bans and mandatory arbitration clauses from the 2016 rule—practices used, primarily in the for-profit college industry, to prevent students from suing a school for misconduct in court;
- Eliminates ability for borrower whose claims are denied from having their claims reconsidered with new evidence;
- Eliminates automatic closed school discharge provision from the 2016 rule for schools that close after July 1, 2020—provision requires automatic discharge of loans for any borrower who has not enrolled in another Title IV program within three years of the school’s closure.
Organizations supporting today’s resolutions include The Institute of College Access and Success, National Association of College Admissions Counseling, Student Veterans of America, Veterans Education Success, The Education Trust, National Education Association, Project on Predatory Student Lending, National Consumer Law Center (on behalf of its low income clients), Third Way, Americans for Financial Reform, Center for Responsible Lending, and American Federation of Teachers.
The Congressional Review Act (5 U.S.C. §801-808) gives Congress the authority to overturn rules promulgated by federal agencies. A CRA resolution of disapproval must be passed by both the House and the Senate and signed by the President in order to overturn a rule. The CRA provides expedited procedures in the Senate for a resolution of disapproval to be considered on the floor—allowing discharge from committee upon the petition of 30 Senators, after which any Senator can bring a resolution to the floor with only a simple majority needed for passage if certain procedural steps are met. If a CRA resolution of disapproval is passed by both chambers in Congress and signed by the President, the rule has no effect and the agency is prohibited from reissuing the disapproved rule in “substantially the same form” in the future.
In 1992, Congress added a provision, known as borrower defense, to the Higher Education Act to give borrowers a legal right to discharge their federal student loans due to misconduct by their institution. In 1995, the Department of Education, at the direction of Congress in the 1992 HEA amendments, promulgated a final rule establishing the criteria for borrowers to receive a borrower defense discharge. The authority was rarely used until the major collapse of predatory for-profit Corinthian Colleges. As a result of this collapse which left an estimated 350,000 students with worthless degrees and fraudulent student debt, the Department began receiving a flood of borrower defense claims from Corinthian and other students—largely from for-profit colleges. Facing a flood of defrauded borrowers seeking discharges, the Obama Department announced it would enter a negotiated rulemaking to update its 1995 borrower defense rule because it “provided little detail on how borrowers could submit, and how the Department would adjudicate claims.” In October 2016, the Department issued its final borrower defense rule—estimated to provide $17 billion in relief to students harmed by school misconduct and abrupt school closures. Upon taking office, Secretary DeVos delayed implementation of the 2016 rule—delays which were eventually found by a federal judge to be illegal, making the rule take effect—and announced an effort to rewrite the rule. In the meantime, Secretary DeVos has failed to process nearly 180,000 borrower defense applications currently pending at the Department as of March 31, 2019.
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