Today the House of Representatives passed House Joint Resolution 76, cosponsored by Congressman Brian Higgins (NY-26), to reverse a rule put forth by the U.S. Department of Education that would deny debt relief to students defrauded by their college, university, or other institution of higher education. Originally, under the Higher Education Act borrower defense repayment rule created by Congress in 1992, student borrowers who were defrauded by their school were entitled to relief up to six years from when they responsibly could have discovered the misrepresentation. Under Secretary Betsy Devos, the Department of Education finalized changes to the rule in 2019, diminishing the timeline to three years with claims outside the three-year window being rarely allowed even when the school’s misconduct was discovered through a government investigation. Affected borrowers include students at ITT Technical Institute, which had a location in Western New York from 1996 until 2016 when it abruptly closed.
“For students who have been taken advantage of by these predatory colleges we should be trying to make the repayment process easier, not harder, which is why I am a proud cosponsor of H.J.Res 76, a resolution which does just that,” said Congressman Higgins.
In 2016, the Obama Administration put forth a detailed process by which students could seek loan relief under the borrower defense repayment rule in the wake of the collapse of the for-profit Corinthian Colleges. Under the 2019 DeVos rewrite of the rule, many of the student protections put in place by the Obama Administration around the borrower defense repayment rule have been rolled back. Now, a borrower would need to prove that not only did the school make a substantial misrepresentation on which the borrower relied when deciding to take out loans, but also that the school made the misrepresentation with the knowledge that it was false, that the school acted with reckless disregard, and that the borrower suffered a specific type of financial harm from this misrepresentation.
In 2016, the Department of Education estimated that the borrower defense repayment rule would provide $17 billion in relief to students harmed by school fraud and abrupt closures. Under the new rule, the Department estimates that just 3 percent of the loans associated with these types of misconduct would be cancelled.
The Department of Education announced the new rule last August and it is scheduled to take effect on July 1, 2020. In December, Secretary DeVos revealed during a hearing in the House Education and Labor Committee that the Department had a backlog of approximately 290,000 students appealing for relief.
H.J.Res. 76 expresses Congressional disapproval of the rule under the Congressional Review Act, which allows a rule put forth by the Administration to be overturned if both the House and the Senate pass a resolution rejecting the rule. With passage in the House complete, the resolution now requires action in the Senate to restore a more streamlined process to help defrauded student borrowers gain access to debt relief.
The resolution is supported by Student Veterans of America, the National Education Association, American Legion, NAACP, the National Consumer Law Center, AFL-CIO the Center for Responsible Lending, the American Federation of Teachers and dozens of other organizations.