In 2015 former Corinthian students launched the nation’s first-ever debt strike and started a campaign to demand debt cancellation for defrauded student loan borrowers. In the months since, thousands of people from multiple for-profit colleges flooded the Department of Education with debt disputes in an unprecedented collective effort to force the Department to acknowledge that its own ‘Defense to Repayment’ law requires them to cancel loans when students are defrauded.
For months, students have been waiting for a final ruling about how and when the Department will actually provide debt relief.
Today, after months of negotiations, the agency published a document that only partly answers those questions. It is a proposed rule, which means that it will be open for comments for 45 days (more on how you can comment soon!), and then, after responses to comments, will become the final rule. It will go into effect next year.
The new rule could potentially do some good things for students.
The Department says it intends to:
-Ban the arbitration clauses that have prevented students from filing class action lawsuits and from having their day in court.
-Allow for collective discharges in cases where groups of students were harmed by the school. In some cases, individuals will not have to apply to be considered for group-wide relief.
-Allow FFEL borrowers to get forbearance while their claims are being reviewed.
Unfortunately, the proposal could make it harder for many students to get relief.
-Whether collective relief is available for any group of students will be totally up to the Department. We don’t trust them to do the right thing. They don’t have a good track record. In fact, they are currently fighting a lawsuit brought by students who attended a failed beauty school.
-The Department wants to limit discharges for students who got “some value” out of their educations. Who has the authority to determine which students got value out of their degrees and which didn’t? We don’t believe for-profit college degrees offer any value to students that they couldn’t have gotten for a much lower cost somewhere else.
-FFEL borrowers will have to go through the process of consolidating into Direct loans to be considered for relief. This is an outrageous and arbitrary rule that requires 40% of current borrowers to jump through extra hoops to get relief.
-Any discharge for FFEL borrowers will only apply to loan amounts not paid and it’s unclear if FFEL borrowers will be eligible for a group discharge.
-For future students, the Department will grant debt relief only in cases where students were explicitly lied to (the word they use is “misrepresentation”). But students who were pressured into signing paperwork, for example, also deserve debt relief.
The above bullets are the most crucial points from today's announcement. The proposed rule contains other details that we will inform you about in the coming weeks.
What's the Takeaway?
Make no mistake: the fact that this rule contains any good news is the result of the collective work of debtors who have refused to give up the fight. But we continue to believe that the Department is making it far too difficult for students to get the relief they are entitled to by law. The bottom line is that they have given us no reason to trust them.
We will keep organizing to make sure that the Department does more than issue statements and promise to help. We will keep fighting for a full discharge for everyone. The road is long but we won’t give up until we reach the end together!