Following a letter from 35 Senate Democrats, the Department proposed to provide a path to group debt relief, ban schools from forcing students to sign arbitration clauses, and improve the statute of limitations on claims
(Washington, D.C.) – Today, Senator Patty Murray (D-WA), the top Democrat on the Health, Education, Labor, and Pensions (HELP) Committee applauded the U.S. Department of Education’s move to help student loan borrowers who have attended a college or university that engaged in deceptive or fraudulent practices. After Murray and other Democrats’ pushed for changes, the Department announced on Friday it would propose new steps to make it simpler for similar groups of students to seek debt forgiveness, including providing a pathway to automatic debt relief to groups of students, a reversal from previous drafts of the rule. The Department’s proposal would also ban mandatory arbitration clauses from student enrollment agreements, which prevent students from filing claims against their school in court, and improves the statute of limitations on borrowers’ ability to receive debt relief for outstanding debt. The new limitation on arbitration clauses, first proposed in a 2012 HELP Committee report, will be included in the negotiated rulemaking process.
“For too long, student loan borrowers who were the victims of deceptive, misleading, and fraudulent practices have been left with a crushing burden of student debt they cannot repay,” Murray said. “I’m pleased the Department is moving forward with many of our recommendations, aimed at protecting these victims and holding schools accountable. When colleges or universities engage in deceptive and misleading practices, student borrowers deserve immediate debt relief, so I will continue to advocate for a strong, final rule for these borrowers.”
Last week, 35 Senate Democrats cited their concerns with the Department’s initial proposal for allowing students to clear their student debt through the process known as “defense to repayment” in a letter to President Obama. The Senators asked the President to “provide fair and equitable debt relief to the victims of these violations.” With the Department’s new proposal, the negotiated rulemaking committee will meet to finalize the rule later this year.