The Obama administration used its plan to start forgiving debt of borrowers who attended schools the administration accused of deceptive marketing, including the now-defunct Corinthian Colleges.
The National Consumer Law Center, a student advocacy group, said the new rules are too narrow, and will prevent many victims of college fraud from getting relief.
"Today's action by the Department will result in a high risk of default on student loans and lifelong financial instability for the students," Abby Shafroth, an attorney for the center, said in a statement.
The agency said it won't require, as initially proposed, for borrowers to first fall into default on their loans before filing a claim to have student loans canceled.
The rules respond to claims from tens of thousands of students-most of them having attended for-profit colleges-who say their colleges deceived them about the likelihood they would get a job if they attended the school.
The borrower-defense rules are authorized under the 1965 Higher Education Act, which says the department can relieve a borrower of his or her obligation to repay their federal student loan if that borrower proves the school they attended deceived them.
Federal law makes it extremely hard for Americans to discharge student loans in bankruptcy court.
https://www.wsj.com/articles/u-s-unveils-rules-on-forgiving-student-loans-after-school-fraud-11567205724?mod=hp_listc_pos1
The National Consumer Law Center, a student advocacy group, said the new rules are too narrow, and will prevent many victims of college fraud from getting relief.
"Today's action by the Department will result in a high risk of default on student loans and lifelong financial instability for the students," Abby Shafroth, an attorney for the center, said in a statement.
The agency said it won't require, as initially proposed, for borrowers to first fall into default on their loans before filing a claim to have student loans canceled.
The rules respond to claims from tens of thousands of students-most of them having attended for-profit colleges-who say their colleges deceived them about the likelihood they would get a job if they attended the school.
The borrower-defense rules are authorized under the 1965 Higher Education Act, which says the department can relieve a borrower of his or her obligation to repay their federal student loan if that borrower proves the school they attended deceived them.
Federal law makes it extremely hard for Americans to discharge student loans in bankruptcy court.
https://www.wsj.com/articles/u-s-unveils-rules-on-forgiving-student-loans-after-school-fraud-11567205724?mod=hp_listc_pos1
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