March 11, 2020

Cortez Masto Statement on Senate’s Vote to Protect Defrauded Student Loan Borrowers

Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) issued the following statement after the Senate voted 53-42 in favor of a Congressional Review Act (CRA) resolution to overturn the Department of Education’s rewritten Borrower Defense Rule. Earlier this year, the House of Representatives passed a companion resolution introduced by Representative Susie Lee (D-Nev.-03) to reinstate protections for student loan borrowers.  

“Secretary DeVos’ Borrower Defense Rule unfairly penalizes students for the actions of predatory for-profit colleges and makes it harder for them to access loan forgiveness. For former students of Brightwood College and other shuttered for-profits in Nevada, this rule means they could be left out in the cold. I’m proud that the Senate stood up to Secretary DeVos today, and I urge the President to join Congress in sending the message to unscrupulous corporations that they will not be allowed to fleece hardworking Americans.”

BACKGROUND:

The DeVos Borrower Defense Rule makes it more difficult for borrowers who are defrauded by their school or harmed by their school’s closure to receive the relief to which they are entitled, and which Congress intended, under the Higher Education Act (HEA). Specifically, the DeVos rule:

  • Cuts $11.1 billion in expected relief to students compared to the 2016 rule, currently in effect, by making it more difficult for borrowers to obtain relief;
  • Increases the burden on defrauded borrowers to gather and submit, often impossible to obtain, evidence to prove their claim including that the school intentionally harmed them;
  • Requires borrowers to apply individually for relief rather than receiving automatic discharges when a group of borrowers has been harmed by widespread fraud or misconduct;
  • Establishes a statute of limitations on claims—expiring 3 years after leaving school—despite the fact that a school’s misconduct often doesn’t become known until many years after it;
  • Eliminates judgments against a school for misconduct as sufficient grounds for a borrower to receive a discharge;
  • Eliminates prohibition on class action bans and mandatory arbitration clauses from the 2016 rule—practices used, primarily in the for-profit college industry, to prevent students from suing a school for misconduct in court;
  • Eliminates ability for borrower whose claims are denied from having their claims reconsidered with new evidence;
  • Eliminates automatic closed school discharge provision from the 2016 rule for schools that close after July 1, 2020—provision requires automatic discharge of loans for any borrower who has not enrolled in another Title IV program within three years of the school’s closure.