Early this year, the Department of Education (ED) initiated negotiated rulemaking primarily to establish a new federal standard and process for determining whether a borrower has a defense to repayment on a loan based on an act or omission of a school. The Notice of Proposed Rulemaking (NPRM) released by ED does this and a whole lot more, including proposed revisions to the financial responsibility standards and additional disclosure requirements for schools.
ED proposes additions to the Direct Loan regulations and to program participation agreement provisions relating to schools’ current use of certain dispute resolution procedures for claims that may form the basis of borrower defenses.
Specifically, for Direct Loan participants, the proposed rules would:
ED believes these rules are needed in order to maximize the effectiveness of ED’s proposed processes for submitting and determining the validity of borrower defense claims.
This article is the second in a series of four articles describing the proposed rules. Once published, the other articles in the series will be posted on our Notice of Proposed Rulemaking - 2016 page.
Publication Date: 7/25/2016