House Democrats Question ED’s Proposed Borrower Defense Application

By Owen Daugherty, NASFAA Staff Reporter

Democratic lawmakers on the House Committee on Education and Labor wrote to Education Secretary Betsy DeVos Monday signaling their opposition to the Department of Education’s (ED) proposed changes to the borrower defense application, while urging ED to make the application simpler for defrauded borrowers.

The lawmakers took issue specifically with two proposed changes to key components of the form borrowers use to request their student loan debt be forgiven if they have been victim to certain types of institutional misconduct.

The letter, submitted on the last day of the comment period on the “Borrower Defense to Loan Repayment Universal Form,” asserted that the form is too long and incorrectly applies the rules for students who borrow after July 1, 2020, to all borrowers.

ED’s proposed changes to the form would be used to replace the most recent borrower defense form, which expired at the end of last year.

Because the borrower defense regulations have gone through several negotiated rulemaking sessions, there are currently three sets of rules — from 1995, 2016, and 2019 — that apply to borrowers depending on when they took out their loans. The proposed changes, however, don’t “always clearly delineate which questions are relevant to each set of borrowers,” the lawmakers wrote.

Each set of regulations “contains different elements and data required to adjudicate a claim and determine relief,” the lawmakers wrote, noting that the proposed changes include some information that is only relevant to the 2019 rules “with no indication that this information will be asked solely of borrowers applying under the 2019 standard.”

The lawmakers also took issue with a proposed change that asks borrowers to indicate how they were adversely impacted by their respective institution’s actions. Under the current methodology ED uses to review borrowers' claims, relief is awarded based on harm at the program and not the individual level, “meaning that all borrowers who attended the same program will receive the same amount of relief.”

Therefore, lawmakers argued that questions “about an individual’s financial experiences are unnecessary.”

Another question on the form that lawmakers want cut requires the defrauded borrower to find the "name and title of the person at the school who provided the misleading information.”

“These types of superfluous questions may lead a borrower to believe they don’t have sufficient information to make a successful claim,” they wrote.

Consumer advocates during the negotiated rulemaking sessions for the 2019 rules were strongly opposed to provisions that would create additional burden for borrowers, who at the time the misrepresentation occured, they said, would not have known to collect that kind of documentation.

“Overall, [ED] should take steps to shorten the form, better target the questions depending on when the borrower took out his or her loan, and only ask questions that are needed to establish the facts,” the lawmakers wrote. 

Democrats’ objection to the latest proposed changes to the application form comes after both the House and Senate voted earlier this year to block the implementation of the Trump administration’s rewritten borrower defense regulations. Despite the support from across the aisle, it's unlikely the resolution will take effect. The White House in January released a statement saying that if the resolution passed, advisors would recommend that President Donald Trump veto it.

The program has been fraught with issues since DeVos first announced plans in 2017 to halt the implementation of the Obama-era regulations and rewrite them. That move has faced political and legal challenges since it was announced, culminating last month when ED reached a settlement in court and agreed to process the backlog of borrower defense applications.

As part of a class action settlement, ED has 18 months to process nearly 170,000 applications that student loan borrowers have submitted.

Meanwhile, Sen. Dick Durbin (D-Ill.) on Monday said he would push to include full loan forgiveness for students defrauded by two defunct for-profit colleges in the next coronavirus economic relief package.

Durbin’s Coronavirus Emergency Borrower Defense (E-BD) Act would provide relief to borrowers who attended ITT Tech and Corinthian Colleges, which both closed after findings of fraud from investigations by ED and state attorneys general.

“There is no reason for these borrowers to wait any longer, as [ED] continues to drag its feet, for the relief to which there is no legal doubt that they are entitled — especially in light of the current emergency,” a summary of the bill said. “With the clear findings and evidence of fraud in these cases as its basis, Congress can and should act to statutorily relieve these borrowers of their student debt burden immediately.”


Publication Date: 5/5/2020

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