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U.S. Department of Education Announces Borrower Defense Rules

November 7, 2016

On October 28, the Department of Education announced the final regulations that will protect student borrowers against misrepresentation or fraud by post-secondary institutions. These regulations also provide a clear process for loan forgiveness in cases of intentional misconduct.

According to The Department’s release, the final regulations will protect borrowers and hold institutions accountable by:

  • Giving borrowers access to consistent, clear, fair, and transparent processes to file claims
  • Empowering the Secretary to provide debt relief to borrowers without requiring individual applications in instances of widespread misrepresentations
  • Protecting taxpayers by ensuring that financially troubled institutions provide the government with protection against the risks they create and that institutions whose actions lead to discharges of Federal student loans are held responsible
  • Helping students make more informed decisions by requiring proprietary schools with poor loan repayment outcomes to include a plain-language warning in their advertising and promotional materials
  • Ensuring affected borrowers have information about loan discharge when schools close and access to an automated process
  • Banning schools from inducing students to sign pre-dispute arbitration agreements that waive their rights to go to court and bring class action lawsuits based on borrower defense claims

For more information on the new regulations, see The Department’s release.

 

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