AG Ferguson issues statement on DeVos' delay of student borrower defense rules

AG Ferguson issues statement on DeVos' delay of student borrower defense rules”

The Trump administration is set to eliminate Obama-era rules targeting for-profit schools that left students with high amounts of debt, according to Dow Jones.

In a news release on Tuesday, Ms. DeVos said: "Fraud, especially fraud committed by a school, is simply unacceptable". Colleges and universities are especially concerned about the excessively broad definitions of substantial misrepresentation and breach of contract, the lack of meaningful due process protections for institutions and "financial triggers" under the new rules.

The Department of Education unveiled the massive proposed overhaul of the Borrower Defense rules in June 2016 and finalized the measures in October 2016, aiming to hold schools accountable in a court of law when they screw over students.

DeVos said she would also seek to redo a "gainful employment" rule that was meant to help students avoid enrolling in and taking out student loans for career colleges that consistently fail to deliver on promises of job security and high salaries for graduates.

The Obama administration billed the borrower defense rule as a simpler process for handling claims by consumers who say they were defrauded by for-profit schools and seek to have the federal government forgive their student loans.

DeVos said in a statement Wednesday that the regulations were "overly burdensome and confusing" and need to be streamlined.

The department noted that while negotiated rulemaking occurs, applications for student debt relief will still be processed under the current borrower defense rules. But a number of states are now attempting to step in to do the job the Department of Education won't.

For-profits have slammed the rule as unfairly punitive because it establishes automatic triggers that would require a school to put up a letter of credit - a large sum of money - every time a lawsuit is filed against it to protect taxpayers if the institution fails.

"It's time to take a step back and make sure these rules achieve their objective: helping harmed students", Education Secretary DeVos said in a statement.

DeVos has said that students promised loan forgiveness will receive it, but the agency is still studying these regulations.

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