Secretary DeVos Announces Regulatory Reset to Protect Students, Taxpayers, Higher Ed Institutions
Negotiated rulemaking committees to convene on Borrower Defense to Repayment
and Gainful Employment to improve regulations
Currently approved BDR claims to be discharged this month, claims to continue to be processed
Today, U.S. Secretary of Education Betsy DeVos announced the Department’s
intention to establish rulemaking committees on Borrower Defense to Repayment
(BDR) and Gainful Employment (GE) regulations. The Department
intends to develop fair, effective and improved regulations to protect
individual borrowers from fraud, ensure accountability across institutions of
higher education and protect taxpayers.
“My first priority is to protect students,” said Secretary DeVos. “Fraud, especially fraud committed by a school, is simply
unacceptable. Unfortunately, last year’s rulemaking effort missed an
opportunity to get it right. The result is a muddled process that's unfair to
students and schools, and puts taxpayers on the hook for significant costs.
It's time to take a step back and make sure these rules achieve their
purpose: helping harmed students. It’s time for a regulatory reset. It is
the Department’s aim, and this Administration’s commitment, to protect students
from predatory practices while also providing clear, fair and balanced rules
for colleges and universities to follow.”
Due to pending litigation challenging the BDR regulations, the Department is
postponing the effective date pursuant to section 705 of the Administration
Procedures Act. While negotiated rulemaking occurs, the Department will
continue to process applications under the current borrower defense rules.
“Nearly 16,000 borrower defense claims are currently being
processed by the Department, and, as I have said all along, promises made
to students under the current rule will be promises kept,” said Secretary DeVos.
“We are working with servicers to get these loans discharged as expeditiously
as possible. Some borrowers should expect to obtain discharges within the next
several weeks.”
Postsecondary institutions of all types have raised concerns about the BDR
regulations since they were published on Nov. 1, 2016. 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.
As part of the Department’s regulatory review of its regulations, the agency
will also convene a second negotiated rulemaking committee on Gainful
Employment. As the Department worked on implementing this regulation, it
became clear that, as written, it is overly burdensome and confusing for
institutions of higher education.
The Department plans
to publish its Notice of Intent to Conduct Negotiated Rulemaking on BDR and GE
in the Federal Register on June 16, 2017. The Department will conduct
public hearings on BDR and GE on July 10, 2017, in Washington, D.C. and July
12, 2017, in Dallas, Texas.
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