Earlier this year, Congress halted the new borrower defense rule proposed by Education Secretary Betsy DeVos, set to take effect on July 1, 2020. The House of Representatives and Senate both enrolled the Congressional Review Act (CRA) to overturn the new rule. The CRA allows congress to pass such resolutions to prevent a federal agency from implementing a rule, with the full force of the law, and prevents the agency from issuing a similar rule without congressional authorization. As the final step, the bipartisan bill was sent to President Trump last month and vetoed on May 29.
The Borrower Defense to Repayment program was originally established by the Obama administration to provide student debt relief to students who were duped or defrauded by predatory schools. Borrowers could submit an application for student loan forgiveness to the U.S. Department of Education for review. Last year, DeVos introduced new rules to govern the program, which many higher education organizations claim significantly weakened the Borrower Defense program. The new rules would require that student loan borrowers to prove that their college made a deceptive statement “with knowledge of its false, misleading or deceptive nature or with reckless disregard for the truth.” It significantly tightens the Obama-era rules for student borrowers who say their schools defrauded them, imposing a three-year deadline on claims and eliminating a requirement that the department automatically wipe away the loans of some students whose schools closed while they were enrolled. Many believe the new rules would be a difficult standard for borrowers to meet, since it would be very challenging for individual borrowers to be able to prove “knowledge” on the part of any college or university.
The Department of Education argues that the Obama-era standards were too permissive, allowing too many students to get their loans erased, and were unfair to colleges accused of fraud, as well as taxpayers, who are on the hook for the loans if the college can’t pay. The changes were opposed by borrower advocates but embraced by for-profit colleges, who said their industry had unfairly been targeted by the Obama administration. The Department of Education estimates that the stricter rules will reduce loan forgiveness by around $500 million each year. In a statement following his veto, President Trump said the Congress-passed measure “sought to reimpose an Obama-era regulation that defined educational fraud so broadly that it threatened to paralyze the Nation’s system of higher education. The Department of Education’s rule strikes a better balance, protecting students’ rights to recover from schools that defraud them while foreclosing frivolous lawsuits that undermine higher education and expose taxpayers to needless loss.”
While Trump issued a veto to stop the CRA bill, Congress can override his veto with a two-thirds supermajority, which neither the House nor the Senate had in the initial votes earlier this year. The House of Representatives has scheduled a floor vote for July 1.
Sources:
Presidential Veto Message to the House of Representatives for H.J. Res. 76
Statement from the President Regarding Veto of H.J. Res. 76
NY Times: DeVos Toughens Rules for Student Borrowers Bilked by Colleges
Forbes: Congress Reverses DeVos Rule On Loan Forgiveness – Will Trump Veto?
Politico: Congress sends rebuke of DeVos ‘borrower defense’ rule to Trump’s desk
Fox News: President Trump vetoes bipartisan measure against DeVos’ loan rules
InsideHigherEd: Borrower-Defense Rule Saved by Trump Veto but Still Faces Fight in Court