***VIDEO FILE INCLUDED*** House Passes Rep. Susie Lee’s Bipartisan Bill to Overturn 2019 Borrower Defense Rule

January 16, 2020
Press Release

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Washington, D.C. – Today, the House of Representatives passed U.S. Rep. Susie Lee’s (Nev.-03) Congressional Review Act (CRA) Resolution, H.J.Res. 76 with bipartisan support. H.J. Res. 76 would overturn the U.S. Department of Education’s (DOE) 2019 Borrower Defense rule that gutted essential protections for student borrowers and taxpayers. The resolution passed with a vote of 231 in favor and 180 against.

The following are Rep. Lee’s remarks addressed to her colleagues on the House floor, as prepared for delivery:  

I am here today for one reason: to ask that my colleagues in the House stand with me to make clear to the American people that we care more about defending students than enriching predatory schools.

That is what my bill, House Joint Resolution 76, is all about. 

In 1992, Congress added a rule, known as borrower defense, to the Higher Education Act to give students a legal right to seek forgiveness on their federal student loans because of misconduct by their school.  

Predatory school misconduct in the 80’s was so rampant, it was painfully clear—to Democrats, Republicans, and everyone in between—that we need protections in place for students who are scammed and cheated by their institution.  

And that’s just as true today.  

Corinthian Colleges, ITT Tech, University of Phoenix, Dream Center. 

350,000. Let me repeat that. 350,000 students have filed claims alleging they were defrauded by these institutions since 2015.  

They were lied to about the job prospects they’d get from these schools, they were lied to about the transferability of their credits, they were lied to about the quality of education they would receive.  

The only thing they got was a useless degree and a mountain of debt after these schools abruptly closed their doors because of rampant misconduct.  

The most painful part is that these are mostly students from low-income backgrounds, communities of color, and veterans. These are Americans we should be standing up for, not taking advantage of.   

In 2016, the last administration created a new Borrower Defense rule to streamline the process to help these students. And it was working.  

Sounds pretty good right? Well, not to Betsy DeVos.  

She rewrote the Borrower Defense rule to make it almost impossible for a defrauded students to get relief on their student loans.  

Even in cases where the schools clearly violated the law, the burden of proof on the defrauded student is so absurdly unrealistic, it would take a team of lawyers for the student to have a shot at proving intent and misconduct from the school.  

But the point made by proponents of the DeVos Borrower Defense Rule that is most insulting – is that this new rule saves taxpayer dollars. That’s simply false.  

The new rule severely weakens the early warning system that ensures predatory schools, not taxpayers, cover the cost of debt relief. As a result, in the few cases where relief is rewarded under the DeVos rule, taxpayers will be the ones to foot the bill. 

And beyond that, the only reason you can say this rule saves money, is because they are denying relief to every legitimately defrauded student.  

Let me be clear: if Betsy DeVos’s 2019 Borrower Defense Rule goes into effect, more students will become victims of fraud with no way to climb out of the hole that our government dug for them. 

This puts my colleagues in Congress on the record. Members have a choice to make, and if they choose to vote against this resolution, they will have to go back home and tell the students, veterans, and constituents in their district that they chose to side with predatory schools over them. 

I think the choice is clear.

After the vote, Rep. Lee held a joint press conference with U.S. Sen. Dick Durbin (Ill.) who is leading the companion bill in the Senate. They were joined by leadership from American Legion, American Federation of Teachers (AFT), Veterans Education Success (VES), and The Institute for College & Success (TICAS), along with Kendrick Harrison, an Iraq War veteran and local Las Vegan who was defrauded by the now-defunct for-profit college Argosy University.

Reps. Mark Takano (Calif.-41), David Trone (Md.-06), Lucy McBath (Ga.-06), Haley Stevens (Mich.-11), Pramila Jayapal (Wash.-07), Lori Trahan (Mass.-03), and Andy Levin (Mich.-09) delivered remarks at the press conference as well.  

Please find a link to the video of the press conference here.

BACKGROUND: H.J. Res. 76 has 162 co-sponsors in the House of Representatives. 

A copy of the House resolution of disapproval is available here. A copy of the Senate resolution of disapproval is available here.  

The DeVos borrower defense rule makes it more difficult 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).  Specifically, the DeVos rule: 

  • Cuts $11.1 billion in expected relief to students compared to the 2016 rule, currently in effect, 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 in court; 
  • Eliminates ability for borrower whose claims are denied from having their claims reconsidered with new evidence; 
  • Eliminates automatic closed school discharge provision from the 2016 rule for schools that close after July 1, 2020—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. 

Organizations supporting today’s resolutions include The Institute of College Access and Success, National Association of College Admissions Counseling, Student Veterans of America, Veterans Education Success, The Education Trust, National Education Association, Project on Predatory Student Lending, National Consumer Law Center (on behalf of its low income clients), Third Way, Americans for Financial Reform, Center for Responsible Lending, and American Federation of Teachers. 

The Congressional Review Act (5 U.S.C. §801-808) gives Congress the authority to overturn rules promulgated by federal agencies.  A CRA resolution of disapproval must be passed by both the House and the Senate and signed by the President in order to overturn a rule.  The CRA provides expedited procedures in the Senate for a resolution of disapproval to be considered on the floor—allowing discharge from committee upon the petition of 30 Senators, after which any Senator can bring a resolution to the floor with only a simple majority needed for passage if certain procedural steps are met.  If a CRA resolution of disapproval is passed by both chambers in Congress and signed by the President, the rule has no effect and the agency is prohibited from reissuing the disapproved rule in “substantially the same form” in the future. 

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 in the 1992 HEA amendments, 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 were eventually found by a federal judge to be illegal, making the rule take effect—and announced an effort to rewrite the rule.  In the meantime, Secretary DeVos has failed to process nearly 180,000 borrower defense applications currently pending at the Department as of March 31, 2019

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