The Education Department will rewrite its overhaul of a 2016 student loan rule, officials said last week. And the new proposal will likely drop the most restrictive provisions of an earlier attempt to replace the regulations.
Education Secretary Betsy DeVos has sought for nearly two years to revamp the borrower-defense rule, which outlines how borrowers who were defrauded or misled by their college can seek loan forgiveness. The Obama administration issued the rule after a flood of debt-relief claims from students who attended defunct for-profit colleges. A proposal from the department last summer suggested allowing borrowers to seek relief only if they’d defaulted on their loans and would have restricted loan forgiveness for borrowers whose institution abruptly closed.
In negotiated rule-making meetings last week, a department official said that it is no longer seeking to restrict relief for students at institutions that shut down, known as closed-school discharge, if a college offers students options to complete their degree elsewhere.
Bloomberg Government also reported last week that the department would drop a proposal to restrict loan forgiveness to borrowers in default.
After a public comment period on the new proposal, the Education Department must issue a final rule by Nov. 1 for its borrower-defense regulation to take effect in 2020.