Talks Over Federal Debt Relief Rules End in Stalemate

March 21, 2016

A U.S. Department of Education rule-making panel on Friday failed to reach agreement on new standards for when federal student loan borrowers can seek debt forgiveness on the grounds that they were misled or defrauded by their colleges.

The committee’s failure to reach consensus on an entire slate of proposals -- which also included restrictions on mandatory arbitration agreements at colleges as well as an expansion of the federal government’s ability to require troubled colleges to post letters of credit -- means that the Education Department is now free to move ahead with its own plan.

Department officials previously said they intended to finalize the proposals by November so that the new regulations would take effect in July 2017.

Federally appointed negotiators on the panel have been in talks over the proposals since January. Friday was the last scheduled day of negotiations.

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