CONGRESSIONAL DEMOCRATS URGE SECRETARY OF EDUCATION JOHN KING TO PROVIDE FULL RELIEF TO DEFRAUDED STUDENT BORROWERS AND PROTECT AGAINST FUTURE ABUSES WITH A COMPLETE BAN ON MANDATORY ARBITRATION

In new letters, Senate and House Democrats call for a robust “borrower defense” rule that bans mandatory arbitration clauses in enrollment agreements 

Following instances of institutions like Corinthian College using deceptive and predatory practices, defrauded students need new, critical protections 

(Washington, D.C.) – Today, 30 Senate Democrats and 13 House Democrats wrote to Secretary of Education Dr. John King urging him to create strong protections and a streamlined path to debt relief for student loan borrowers in the Department’s forthcoming “borrower defense” rule. The Senate and House letters reinforce the need to ban mandatory arbitration—which limits students’ legal rights—in school enrollment agreements, and to eliminate the federal student loan debt of any student who is the victim of unlawful, unfair, deceptive, or abusive practices in higher education. The letters also call for giving students the right to use state consumer protection laws to receive relief and hold institutions accountable. 

“We believe strongly that it is time to improve the accountability system for our colleges and universities that collectively receive $150 billion in federal student aid revenue each year,” the Senators wrote in the second letter in their series of college accountability efforts. “This rule is a significant opportunity for the Department to improve upon proposals that were presented to negotiators and to further strengthen the outcome for students…We strongly encourage you to hold colleges accountable by banning mandatory arbitration requirements as a condition of the receipt of federal taxpayer dollars.” 

“Mandatory arbitration clauses strip basic legal rights away from students and ban worthwhile actions from ever being heard in court,” the Representatives wrote in their second letter on “borrower defense” rulemaking. “While proposals limiting the use of this practice against certain classes of students and requiring additional disclosures from schools may place constraints on mandatory arbitration, only a complete ban will guarantee students are fully protected.” 

During a negotiated rulemaking process this spring, negotiators discussed various proposals for how to provide defrauded borrowers with debt relief but were unable to reach agreement. The Department is now charged with producing a draft rule by July 1 and a final regulation by November 1 that goes into effect next year. 

On the Senate letter, the list of co-signers include: Senators Patty Murray (D-WA), Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Barbara Boxer (D-CA), Sherrod Brown (D-OH), Ben Cardin (D-MD), Tom Carper (D-DE), Bob Casey (D-PA), Chris Coons (D-DE), Richard J. Durbin (D-IL), Dianne Feinstein (D-CA), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Mazie K. Hirono (D-HI), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Jeff Merkley (D-OR), Barbara A. Mikulski (D-MD), Chris Murphy (D-CT), Bill Nelson (D-FL), Gary Peters (D-MI), Jack Reed (D-RI), Bernard Sanders (I-VT), Brian Schatz (D-HI), Charles Schumer (D-NY), Jeanne Shaheen (D-NH), Debbie Stabenow (D-MI), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Ron Wyden (D-OR).

 On the House of Representatives’ letter, the list of co-signers include: Robert C. “Bobby” Scott (D-VA), Maxine Waters (D-CA), Rubén Hinojosa (D-TX), Raúl M. Grijalva (D-AZ), Marcia L. Fudge (D-OH), Jared Polis (D-CO), Frederica S. Wilson (D-FL), Suzanne Bonamici (D-OR), Mark Pocan (D-WI), Mark Takano (D-CA), Katherine M. Clark (D-MA), Mark Desaulnier (D-CA), and Patrick Murphy (D-FL).

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