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The Trump administration is officially reconsidering and may do away with, two new rules which served as the cornerstone of the Obama administrations tough crackdown on predatory for-profit colleges.
The Department of Education announced on Wednesday its temporarily halt to changes that would erase the student loan debt of borrowers who were cheated by fraudulent colleges. This directly affects the gainful employment mandate, now in limbo, which makes colleges responsible, by cutting off student loans to the school, if their graduates don’t earn enough money to pay off their student debt.
The timing of this freeze is particularly interesting as it comes a mere two weeks before these new discharge rules were to take effect on July 1. The pause is said to be an opportunity for the agency to dive deeper into the regulations and make a decision on the discharge rule once they had taken a thorough look.
Education Secretary Betsy DeVos said in a statement, “Fraud, especially fraud committed by a school, is simply unacceptable.” “Unfortunately, last year’s rule-making 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.”
The agency also said that Obama’s gainful employment rules are “overly burdensome and confusing” for colleges.
However, not all are in favor of this freeze and the revaluation of the programs. Critics include Senator Elizabeth Warren of Massachusetts and Patty Murray of Washington, both Democrats, which argue that the department is not legally allowed to unilaterally halt negotiated rules.
“I am extremely disappointed that Secretary DeVos has decided, once again, to side with special interests and predatory for-profit colleges instead of students and borrowers,” Murray said in a statement.
This comes after the Obama Administration pushed through regulations after hundreds of predatory colleges were investigated and then shut down. Schools such as ITT Technical Institute and the Corinthian Colleges are among the schools that collapsed.
These colleges believe it is unfair to single them out and they adamantly oppose regulations such as borrowers defense saying it endangers their ability to succeed.
In January, prior to Trump’s inauguration, Obama announced that 23,000 applicants had been notified that their claims had been approved. Almost 7,000 of those people will be fully discharged. This does not include the other 68,000 application awaiting further review.
The borrowers who have submitted their claim are eager to hear back and some have been waiting almost two years for a response. Last week, a deferral court judge in California ordered the Education Department to file a report within 90 days on one borrower’s application due to the long delay in response.
A lot of anxious borrowers are awaiting the results of their claims and are eager to see how the Trump administration handles the student loan crisis. Student loan discharge is the best possible option for those who were defrauded and many of them will hopefully see relief from their debt.
It remains to be seen how they will rectify the current situation but what remains clear is something major must happen to help the victims of fraudulent schools and predatory lending.