Senate Passes Rep. Susie Lee’s Bipartisan Bill Overturning 2019 Borrower Defense Rule

March 11, 2020
Press Release

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Washington, D.C. - U.S. Rep. Susie Lee (Nev.-03); U.S. Senate Democratic Whip Dick Durbin (Ill.); Senate Democratic Leader Chuck Schumer (N.Y.); Senate Health, Education, Labor, and Pensions Committee Ranking Member Patty Murray (Wash.); and House Education and Labor Committee Chairman Bobby Scott (Va.-03) released the following statements after the Senate’s 53 to 42 bipartisan vote to approve Congressional Review Act (CRA) H.J.Res. 76 to overturn the U.S. Department of Education’s 2019 Borrower Defense rule that guts essential protections for student borrowers and taxpayers. The resolution now heads to President Trump for signature.

“Today, Congress made it clear to the American people that we stand with defrauded students over predatory schools,” said Rep. Lee. “Thank you to Senator Durbin and all of my colleagues in the Senate who voted for our resolution to overturn Secretary Betsy DeVos's harmful Borrower Defense Rule. Overturning this rule is good for students, good for veterans, and good for taxpayers. But the fight is not over. I hope that President Trump signs this bill into law for hundreds of thousands of students in our country to show that they have the right to pursue a quality education without being taken advantage of by predatory schools. I hope the President stands with Congress to show American taxpayers that they will not be forced to foot the bill for the fraudulent behavior of shady institutions. Today, members of Congress, both Democrats and Republicans, showed up and found a solution to a serious problem. Let's build on this momentum and continue to create the broad, bipartisan coalition needed to create a quality, affordable higher education system that works for every American.”

“Today, Republicans and Democrats came together to stand up for defrauded student veterans and borrowers,” said Sen. Durbin. “Congress has now made clear to Secretary DeVos and the Trump Administration that we expect borrowers who are defrauded by their schools to have a fair path to student debt relief under the borrower defense provision of the Higher Education Act. Mr. President, join Republicans and Democrats in Congress in standing up with the American people and the veteran community. Sign this resolution to overturn this rule.”

“With this vote, the message to the Trump administration and the predatory institutions Secretary DeVos is propping up is clear: You can’t cheat students and get away with it,” said Leader Schumer. “I am glad that some of my Republicans colleagues joined Senate Democrats in taking a stand against these for-profit institutions that have been looking to taking advantage of our students, particularly veterans, for far too long.”

“For so many cheated borrowers, getting relief on their student debt can mean all the difference—and help them finally get back on their feet,” said Ranking Member Murray. “Secretary DeVos’ disastrous new rule was intentionally designed to make it harder for defrauded borrowers to get relief. It’s cruel and it’s wrong, and I’m glad that today the Senate voted to overturn it. It’s high time this Administration finally prioritize the interests of students, instead of helping predatory institutions with their bottom line.”

"Student borrowers who are defrauded by predatory colleges should have access to timely and meaningful debt relief,” said Chairman Scott. “But under Secretary DeVos’s rewrite of the Borrower Defense rule, an overwhelming majority of defrauded borrowers would be denied the relief they deserve—leaving them with mountains of debt and a worthless degree. Today, a bipartisan coalition in the Senate agreed that this rule must be repealed. While reversing this harmful proposal is an important first step, ultimately there is only one clear way to stop the Department from weakening consumer protections in higher education: We must pass a comprehensive reauthorization of the Higher Education Act that protects students and taxpayers. The College Affordability Act is a comprehensive overhaul of our higher education system that cracks down on low-quality, predatory schools and restores Obama-era protections for students and taxpayers. This administration is failing to provide defrauded students necessary relief, and it’s Congress’ responsibility to stand up for their interests.”

BACKGROUND: Video of a press conference following today’s vote with Rep. Lee and Sen. Durbin is available here.

In September 2019, Durbin introduced the Senate version of the CRA (S.J.Res. 56) and the House of Representatives voted on a bipartisan basis in January to pass its version of the measure, H.J.Res. 76, introduced by Rep. Lee.

The resolutions were supported by a number of organizations, including veterans’ organizations such as The American Legion.

The 2019 borrower defense rule makes it almost impossible for borrowers who are defrauded by their school or harmed by their school’s closure to receive the relief to which they are entitled, and which Congress intended, under the Higher Education Act (HEA). According to an analysis by The Institute for College Access and Success, the DeVos borrower defense rule will cancel just three percent of all loans associated with misconduct.

CRA resolutions of disapproval allow Congress to overturn regulatory actions of federal agencies with a simple majority vote in both chambers. 

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 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.

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