What the Department of Ed’s Proposed New Rules on Debt Forgiveness Requirements Mean for You – Info Computing
The Trump administration is proposing changing the requirements for defrauded students to have their student loan debt forgiven, making requirements stricter for those who claim they were cheated.
The proposed rules—which the Department of Education is taking public comments on for the next month—change the current Obama-era regulation that allows borrowers with federal student loans to get their debt forgiven if they were misled about the “cost and quality” of their education. It was this regulation that the Obama White House used to get Corinthian College students debt relief in 2015.
Per the Wall Street Journal, this is what the newly-proposed rules would do:
Under one option, the department may require students seeking loan relief to be in default, rather than allowing students to apply for forgiveness while they remain in good financial standing.
Under the alternative, students would continue to submit “affirmative” claims, though the department would hold those claims to a higher standard. Either way, former students would have to show that their colleges had an “intent to deceive” or showed a “reckless regard for the truth” in their advertising or recruitment efforts.
It would also give students less time to file a claim and ban state attorneys general from filing class action lawsuits. The Journal reports the Department of Ed is also considering changing the standard of evidence for students from “a preponderance of evidence” to “clear and convincing” to have their loans forgiven, a higher threshold.
Critics of the current rule—primarily for-profit institutions and historically black colleges, according to Consumer Reports—say it’s too vague. Secretary of Education Betsy DeVos said the proposed changes “would better balance the need to protect borrowers from fraud and the need to protect taxpayers from the cost of unjustified claims,” per CR.
What the Department of Ed’s Latest Student Loan Changes Mean for You
The Department of Education is fighting states over their efforts to more strictly regulate student …
Read more Read
Opponents of the proposed changes say they would primarily harm veterans, minorities and people from low-income communities.
And it comes at a time when the Consumer Financial Protection Bureau is also cutting back on looking into student loan fraud, as students rack up ever more debt and scams increase.
So what you can do? For now, CR advises taking the following steps:
Understand the requirements. Go to the Department of Education’s website for information on how to file a claim under the borrower defense to repayment rule. You’ll find an online application, guidelines on qualification, and what information you need to submit.
Keep tabs on your status. If you file a claim, you can check on the status of the claim at the Department of Education’s borrower defense hotline: 855-279-6207.
Beware of fraudsters. So-called debt relief companies prey on people with student loans, offering to help you discharge loans or qualify for student loan forgiveness programs for a hefty fee. You never have to pay to file a claim to get your loans canceled. Go to the Department of Education’s Student Aid website to find a list of legitimate companies that handle student loan servicing and collections and get tips on how to avoid student loan scams. The Federal Trade Commission also keeps a list of debt relief companies it has taken action against.
If approved, the changes would apply to federal student loans taken out on or after July 1, 2019.
Article Prepared by Ollala Corp