Why Betsy DeVos Will Rewrite These Student Loan Forgiveness Rules

WASHINGTON, DC: Education Secretary Betsy DeVos testifies before the Senate Appropriations Committee on Capitol Hill June 6, 2017 in Washington, DC. (Photo by Win McNamee/Getty Images)

The Trump administration announced Wednesday that it will rewrite two Obama-era rules intended to protect student loan borrowers.

The U.S. Department of Education said new committees will be formed to rewrite rules for Borrower Defense To Repaying and Gainful Employment.

Here’s what you need to know.

What Is Borrower Defense To Repaying?

Borrower Defense To Repaying allows students to have their federal student loans forgiven if a school employed illegal or deceptive practices to encourage the students to borrow debt to attend the school.

This rule was scheduled to become effective July 1, but will now be delayed.

Nearly 16,000 borrower-defense claims are currently being processed by the Education Department, and Secretary of Education Betsy DeVos assured those borrowers that their loans will be discharged as expeditiously as possible.

What Is Gainful Employment?

The gainful employment rule was created to ensure that students earned enough money after graduation to repay their student loans.

For a college to have access to federal student aid, the college must meet minimum gainful employment standards. The current formula says that on average, student loan borrowers of a degree program must not have student loan payments exceed 20% of their discretionary income or 8% of their total earnings.

Both rules were written in response to practices stemming from for-profit colleges, which included companies such as ITT Technical Institute and Corinthian Colleges (both of which shut down).

Why The Change

DeVos believes that the two rules are confusing and unfair to both students and schools. While critics view the move as a win for the for-profit college industry, DeVos says that the rule changes will still help students who are victims of fraud (although she does not detail how).

“Fraud, especially fraud committed by a school, is simply unacceptable,” DeVos said in a statement. “Unfortunately, last year’s rulemaking effort missed an opportunity to get it right. The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs.”

DeVos said she wants to strike a fair balance between protecting students from predatory practices and creating balanced rules to which colleges can adhere.

“It’s time to take a step back and make sure these rules achieve their purpose: helping harmed students,” DeVos said. “It’s time for a regulatory reset. It is the Department’s aim, and this Administration’s commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow.”

The American Federation Of Teachers Perspective

The American Federation of Teachers released a statement on the Education Department’s decision:

“The Trump administration’s actions today show that the White House stands with predatory for-profit schools, not the students they rip off,” said Randi Weingarten, president of the American Federation of Teachers. “About the only thing worse than ripping off students with worthless degrees from for-profit colleges is denying them help to relieve their substantial debt, and allowing the schools to continue to prey on students.”

A Different Perspective

The United Negro College Fund (UNCF) and the National Association for Equal Opportunity (NAFEO) in Higher Education wrote DeVos a letter stating that the borrower defense rule would create a detrimental impact on their member institutions.

Collectively, these two groups represent the interests of 186 historically black colleges and universities (HCBUs) and predominantly black institutions (PBIs) that serve 700,000 students.

In their letter, the UNCF and NAFEO cite the regulatory burden and vague standards associated with the Borrower Defense To Repaying rule, support suspension of any enforcement of the regulation, and called for a new rulemaking process.

What’s Next?

The rule-making process will start next months with public hearings, followed by the appointment of committees comprised of experts and other stakeholders.

How these rules change – and by how much – will be watched closely, particularly with respect to:

  • any revised definitions of fraud and deceptive practices;
  • how gainful employment metrics will be calculated;
  • how taxpayers will save money and how much; and
  • what are the litmus tests for borrowers to have their student loans forgiven or discharged, among other key points.

What do you think? Do these rule changes reduce bureaucracy and save taxpayers money, or are they a win for the for-profit college industry and erosion of student borrower protections? We want to hear from you in the comment section below.

Zack Friedman is the Founder & CEO of Make Lemonade, a personal finance website that helps you compare the best rates and save money for student loans, personal loans, mortgages and more.

Post Falls High School student gets new car for GPA, attendance

School’s out for summer and for seniors graduating high school the next chapter of their life is about to begin.

To help make that transition a little easier, some seniors who maintained a 3.5 GPA and had perfect attendance competed for a new car.

The winner was Robyn Robinson from Post Falls High School.

Image result for Tesla’s Original Designer Created a New Car and It Charges in Just 9 Minutes

Findlay Nissan in Post Falls held a reverse drawing, meaning they would draw names until one person had not been picked.

Robyn told KHQ she was surprised she won.

“Well I don’t have very good luck I’m still in shock,” Robinson said, “and it’s kind of surprising but I was going to have my piano teacher come with me and she was sick this morning so she said I hope you win.”

Robinson says she plans on going to North Idaho College for two years and then transferring to the University of Idaho to pursue a degree in advertising.

 

Study Abroad: US organises annual Student Visa Day in various Indian cities

The US Embassy in the national capital and Consulates in Chennai, Hyderabad, Kolkata, and Mumbai on Thursday opened their doors to more than 4,000 Indian students applying for visas to pursue higher education in the United States. This was the third iteration of the annual Student Visa Day organised by the country to boost higher education ties with India.

“Today, every sixth international student in the United States is from India, and these students are contributing enormously to every aspect of life at the university and in the surrounding communities,” said Embassy Charge d’Affaires MaryKay Carlson.

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This was the third iteration of the annual Student Visa Day organised by the country to boost higher education ties with India.

Currently, 1,66,000 Indian students are enrolled in US institutions of higher education. The US Embassy and the Consulates welcomed the applicants in a festive atmosphere.

Consular staff members were dressed in their alma mater apparel. Some consulates had alumni guest speakers, while others had a video station or other special programs for the applicants.

Representatives from EducationUSA, American Spaces, and recent US graduates gave insights and answered questions from students about college life in the United States.