2016 Borrower Defense Overview

Through the negotiated rulemaking process, stakeholders debated five issues related to borrower defense regulations:

Whether to establish a new standard for the purpose of determining whether a borrower can establish a defense to repayment on a loan based on an act or omission of a school;
The time period of availability for borrower defense to repayment claims;
Developing a regulatory framework for the process of submitting, reviewing, and determining the veracity of borrower defense to repayment claims;
Updating and expanding the existing categories of false certification discharges; and
Whether to revise the financial responsibility or administrative capability regulations and whether to add disclosure agreements to protect students, taxpayers, and the federal government against potential school liabilities and risks.

On Nov. 1, 2016, the Department of Education(ED) published final regulations concerning borrower defense to repayment and other related matters. In response to a lawsuit filed by the California Association of Private Postsecondary Schools, ED delayed the original effective date (July 1, 2017) of these regulations under section 705 of the Administrative Procedures Act (APA), which states that when an agency finds "that justice so requires, it may postpone the effective date of action taken by it, pending judicial review." A second lawsuit was filed by student borrowers and 19 states and the District of Columbia objecting to ED's implementation delay, and the two cases were ultimately consolidated by the courts. By order of the courts, the 2016 final regulations took effect in October 2018.

NASFAA Summary of Final Rules

November 18, 2016 - ED Simplifies Loan Discharges, Issues Prohibition on Certain Contractual Agreements Under New Borrower Defense Rules
November 17, 2016 - ED Makes Few Changes to Borrower Defense Standard and Process in Final Rules
November 10, 2016 - ED Revamps Financial Responsibility Rules

NASFAA Public Comments

August 3, 2016 - NASFAA Submits Comments on Borrower Defense NPRM
August 1, 2016 - NASFAA Signs on to ACE Borrower Defenses NPRM Comments
August 1, 2016 - NASFAA Signs on to NACUBO Borrower Defenses NPRM Comments

Department of Education Resources

NASFAA Comprehensive Coverage of the 2016 Borrower Defense Process

November 14, 2018 - Group Sues DeVos for Failing to Automatically Cancel Loans of Students Whose Schools Closed
October 17, 2018 - Obama-Era Borrower Defense Regulations Go Into Effect After Federal Judge Ruling
October 1, 2018 - California AG Amends Lawsuit on Delayed Processing of Borrower Defense Claims
September 13, 2018 - Judge Rules Against DeVos in Lawsuit Over Delayed Borrower Defense Rule
April 24, 2018 - Consumer Group Sues ED for Documents to Justify Delay of Borrower Defense Implementation
April 18, 2018 - Borrowers Challenge DeVos on 'Tiered Relief' in Class Action Lawsuit
January 18, 2018 - ED Borrower Defense Analysis Breaks Down Thousands of Claims
January 3, 2018 - Warren Asks Inspector General to Review ED's Use of Earnings Data for Loan Discharge
December 21, 2017 - ED Rules on 21,500 Borrower Defense Claims Using New Tiered System
December 5, 2017 - Semiannual Report to Congress Condemns Delay of Borrower Defense, Gainful Employment Regulations
January 27, 2017 - Borrower Defense Rules on Recovery of Funds from Schools Effective Immediately
November 18, 2016 - ED Simplifies Loan Discharges, Issues Prohibition on Certain Contractual Agreements Under New Borrower Defense Rules
November 17, 2016 - ED Makes Few Changes to Borrower Defense Standard and Process in Final Rules
November 10, 2016 - ED Revamps Financial Responsibility Rules
June 14, 2016 - Proposed Rules Would Help Defrauded Student Loan Borrowers
March 21, 2016 - Borrower Defense Neg Reg Meets Anti-Climactic End Without Consensus
March 18, 2016 - Neg Reg Committee Greenlights Mandatory Arbitration Ban, Tussles on Repayment Rates
March 17, 2016 - New Borrower Defense Draft 'A Vast Improvement,' But Negotiators Want More
February 22, 2016 - Negotiators Wrap Up Second Round Of Neg Reg With Focus on False Certification Discharges
February 19, 2016 - Negotiators Discuss Trigger Warnings, Student Disclosures for Borrower Defense Regs
February 18, 2016 - Negotiators Enter Tense Second Session on Proposed Borrower Defense Rules
January 15, 2016 - Neg Reg Wraps Up With Discussion of Scope of Regulations, Visit From Special Master
January 14, 2016 - Day Two of Neg Reg Focuses on Time and Structure of Borrower Defense Process
January 13, 2016 - Borrower Defense Neg Reg Kicks off With Discussion on Role of Consumer Protection

Other Resources

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