Pushed by Murray, final protections will ensure student loan borrowers victim of deceptive and predatory practices receive automatic debt relief and discharge, like those who attended Corinthian Colleges and ITT Tech
Major victory—Colleges are banned from blocking students’ right to sue as individuals or part of class actions
Full list of actions announced today: LINK
(Washington, D.C) - Today, Senator Patty Murray (D-WA), Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, issued the following statement after the U.S. Department of Education (“the Department”) announced its final rule creating strong protections for student loan borrowers who are the victims of unlawful and abusive practices in higher education. The final rule, also known as “borrower defense,” significantly improves the process for these students to have their federal loans discharged, which had previously been rarely used. Crucially, the final rule further strengthens a ban on mandatory arbitration clauses—which force students to waive their legal rights to file lawsuits as individuals or as part of class actions—that are sometimes buried in the fine print in school enrollment agreements.
“I am very proud to have pushed for these strong safeguards that will protect students and hold schools accountable for unlawful and abusive practices,” Senator Murray said. “Students in my home state of Washington and across the country make tremendous sacrifices to be able to pursue a college degree and get ahead—I look forward to continuing to work with the Department to ensure they use all of their existing legal authority to provide relief to defrauded students.”
Another improvement in the final rule includes early implementation of the automatic “closed school discharge” provisions for borrowers whose schools have closed since late 2013—including students from Corinthian Colleges—and who have not re-enrolled at another college within three years. This early implementation, which Senator Murray recently called for in response to the closure of ITT Tech, will lead to borrowers from closed schools who were unable to fill out complicated forms to receive fast-track discharge as early as November 2 of this year, depending on how quickly the Department can implement the provision.
Additionally, the final rule eliminates a complicated appendix from the draft rule to calculate “injury” to each borrower and instead provides straightforward examples that indicate that the Department intends to provide full debt relief as frequently as possible.
Senator Murray has been a leading voice in Congress calling for giving students the right to use protection laws to receive relief and hold institutions accountable. After the collapse of Corinthian Colleges last year, Senator Murray was among the first Members of Congress to call for the Department to explore borrower defense authority. In March of this year, and again in August during public comment, Senator Murray urged the Administration to provide a fair process to all students harmed by the closure of Corinthian Colleges or any other school that had engaged in similar fraudulent or abusive practices.
In April, Senator Murray led a bicameral letter to the Department in advance of their draft rule urging them to provide victims with fair and equitable debt relief, and make significant progress to protect future student loan borrowers. In the letter, Senator Murray strongly encouraged holding colleges accountable by banning mandatory arbitration requirements for schools that use federal student aid, which was confirmed in today's final rule.