After Borrower Defense Negotiation Fails, Department to Craft New Rule

February 16, 2018

Negotiators failed to reach consensus Thursday on new language for borrower-defense regulations, clearing the way for the U.S. Department of Education to craft its own version of regulations designed to protect defrauded student borrowers.

The Obama administration crafted the borrower-defense rule to establish a national standard for student fraud claims after the collapse of Corinthian Colleges and ITT Tech led to a flood of loan-relief claims. Education Secretary Betsy DeVos blocked the rule from going into effect last year and said she would rewrite the regulations to better balance the concerns of students, taxpayers and institutions.

The department was required by law to go through the negotiated rule-making process, in which a panel representing various higher-ed interest groups attempts to seek consensus on the details of a new rule. Without negotiators reaching consensus, the department will aim to issue its own proposed rule by Nov. 1. Members of the public will have another opportunity to comment on the proposed regulation at that point.

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