House Overturns Student Loan Forgiveness Rule

Education Secratary Betsy DeVos changed an Obama-era "borrower defense" rule last year.

The U.S. House of Representatives passed a resolution on Thursday overturning U.S. Secretary of Education Betsy DeVos’ borrower defense rule created in August, which House Democrats say favors predatory universities while limiting student protections under the borrower defense policy.

What We Know:

  • The House voted 231-180 to overturn new regulations introduced by U.S. Secretary of Education Betsy DeVos that critics argue limits student loan forgiveness when a college closes due to fraud.
  • DeVos has argued that the Obama rules made it too easy to receive student loan forgiveness, which unfairly burdened taxpayers. Specifically, DeVos said borrowers impacted by school closure would need to apply for student loan forgiveness, rather than receive it automatically. Effectively, DeVos has argued, this would create a higher bar for student loan forgiveness and save taxpayers $11 billion dollars.
  • Meanwhile, Rep. Susie Lee, D-Nev, who sponsored the resolution stated, “Passing this resolution in the House made it clear that we care more about defending defrauded students than enriching predatory schools. We told DeVos that we’re not going to sit on the sidelines while these institutions scam our families, our friends, our neighbors, and our veterans.”
  • Created in 1992, the borrower defense policy allows students to receive federal student loan relief after being scammed or misled by a fraudulent university or college. When the for-profit Corinthian Colleges Inc. collapsed in 2015 and left thousands of students in debt, President Barack Obama’s Department of Education created the Borrower Defense to Repayment Rule, which stipulated clearer guidelines as to how students could seek forgiveness.
  • To reinstate the borrower defense rules, the U.S. Senate also would have to vote to overturn, which likely will not pass. Even if it did, President Trump likely would veto the bill.

For now, the resolution awaits a decision from the Senate. If blocked by the Senate or by a presidential veto, DeVos’ rule will go into effect on July 1.

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Dominique Browder is a Digital Intern at UnmutedCo.

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