Rep. Lee Statement on Pres. Trump’s Veto of Her Bipartisan Bill to Overturn DeVos Borrower Defense Rule
Las Vegas, Nev. – U.S. Rep. Susie Lee (Nev.-03) released the following statement in response to President Trump’s decision to veto her and U.S. Sen. Dick Durbin’s (Ill.) bipartisan bill to overturn the Department of Education Secretary Betsy DeVos-led 2019 Borrower Defense rule:
“With his veto of my bipartisan bill to overturn Betsy DeVos’s 2019 Borrower Defense rule, President Trump sent a message to the American people that he cares more about enriching predatory schools than protecting defrauded students and veterans. It’s clear the 2019 rule will weaken both protections for students and oversight of shady schools, while forcing taxpayers to foot the bill for the fraudulent actions of a few bad actors.
“Especially during a pandemic, accountability is key. Under the 2019 rule’s weaker oversight guidelines, if a school suddenly closes during or because of fallout from the coronavirus, student borrowers will be left with little to no relief as their loans pile up amidst a devastating pandemic.
“Thankfully, I know the American people get it. My bill passed both chambers of Congress with bipartisan support, and was championed by dozens of education and veterans groups across the ideological spectrum. The fight for our students and veterans is far from over. Congress has the chance to override the President’s veto with a vote in the House. I’m urging all of my colleagues from both sides of the aisle to put students, veterans, and taxpayers first, and vote to overturn the 2019 Borrower Defense rule.”
BACKGROUND: In September 2019, Rep. Lee and Sen. Durbin introduced a Congressional Review Act resolution to overturn the 2019 Borrower Defense rule.
In January 2020, the House of Representatives passed Rep. Lee’s resolution with bipartisan support. Following suit, in March 2020, the Senate passed Sen. Durbin’s resolution with bipartisan support, successfully passing the resolution through both chambers of Congress.
The resolutions were supported by a number of organizations, including veterans’ organizations such as The American Legion and Student Veterans of America.
2019 Borrower Defense Rule
The Secretary DeVos-led 2019 Borrower Defense rule makes it more difficult for borrowers who were defrauded by their schools or harmed by school closures to receive the relief to which they are entitled, and which Congress intended, under the Higher Education Act (HEA). Specifically, the 2019 rule:
- Cuts $11.1 billion in expected relief to students compared to the 2016 rule by making it more difficult for borrowers to obtain relief;
- Increases the burden on defrauded borrowers to gather and submit, often impossible to obtain, evidence to prove their claim including that the school intentionally harmed them;
- Requires borrowers to apply individually for relief rather than receiving automatic discharges when a group of borrowers has been harmed by widespread fraud or misconduct;
- Establishes a statute of limitations on claims—expiring 3 years after leaving school—despite the fact that a school’s misconduct often doesn’t become known until many years after it;
- Eliminates judgments against a school for misconduct as a sufficient ground for a borrower to receive a discharge;
- Eliminates prohibition on class action bans and mandatory arbitration clauses from the 2016 rule—practices used, primarily in the for-profit college industry, to prevent students from suing a school for misconduct;
- Eliminates ability for borrowers whose claims were denied from having their claims reconsidered with new evidence;
- Eliminates the automatic closed school discharge provision from the 2016 rule for schools that close after July 1, 2020. The provision requires automatic discharge of loans for any borrower who has not enrolled in another Title IV program within three years of the school’s closure.
History of the Borrower Defense Rule
In 1992, Congress added a provision, known as borrower defense, to the Higher Education Act to give borrowers a legal right to discharge their federal student loans due to misconduct by their institution. In 1995, the Department of Education, at the direction of Congress, promulgated a final rule establishing the criteria for borrowers to receive a borrower defense discharge. The authority was rarely used until the major collapse of predatory, for-profit Corinthian Colleges.
As a result of this collapse which left an estimated 350,000 students with worthless degrees and fraudulent student debt, the Department began receiving a flood of borrower defense claims from Corinthian and other students—largely from for-profit colleges. Facing a flood of defrauded borrowers seeking discharges, the Obama Department announced it would enter a negotiated rulemaking process to update its 1995 borrower defense rule because it “provided little detail on how borrowers could submit, and how the Department would adjudicate claims.”
In October 2016, the Department issued its final borrower defense rule—estimated to provide $17 billion in relief to students harmed by school misconduct and abrupt school closures. Upon taking office, Secretary DeVos delayed implementation of the 2016 rule—delays which a federal judge eventually found to be illegal—and announced an effort to rewrite the rule. In the meantime, the Department has more than 227,000 pending claims from students waiting for relief and, as of December 10, 2019, the Department has not discharged a single borrower defense claim in 18 months.