Education Department to Propose Compromise in Borrower-Defense Negotiations
February 8, 2018
The borrower-defense rule — crafted by the Obama administration to clarify how students defrauded or misled by their institutions could apply to have their federal loans forgiven — was originally set to take effect last year. But Education Secretary Betsy DeVos blocked the rule and announced she would pursue an overhaul that reflected the concerns of colleges.
A panel of negotiators representing a range of higher education stakeholders is set to meet next week for a third negotiating session, where the department will propose that borrowers filing a loan forgiveness claim meet a “substantial weight of the evidence” standard — essentially, the borrower’s claim they were defrauded, plus some form of evidence. That would be a compromise position between the tougher “clear and convincing” standard sought by college representatives and the lower “preponderance of evidence” standard pushed by student advocates.
The department’s proposal also drops what amounted to a “rogue employee” exception for borrower-defense claims. But it maintains an “intent standard” for those claims, leaving in place potentially the biggest hurdle for negotiators to reach consensus on a new rule.
The proposal also adds a three-year limit for the government to seek reimbursement from a college after it determines there is reason to approve a borrower-defense