For-Profit Student Loan Borrowers May Only Receive Partial Student Loan Forgiveness
Kayleigh McEnany (Left) & Education Secretary Betsy DeVos (Right) speaking at the CPAC 2017.
According to anonymous government sources, the Education Department is considering abandoning, more specifically altering, Obama's policy of erasing the student debt of students from closed-down, for-profit institutions. The policy was commonly known as the Borrower Defense Rule.
In its place, Education Secretary Betsy DeVos is planning to partially forgive some of the $550 million in affected federal loans. The new policy would base forgiveness on relevant and matched industry average incomes.
It is not clear yet how this policy will play out, but it has been assumed that this new policy does not match the volume of forgiveness promised by the previous defense rule. For certain, the collective disappointment of many potentially affected borrowers is great.
Although the Department of Education did not comment on the news, there have been plenty of hints signaling the borrower defense rule change.
Over the last year, watchdogs and critics suspected that the new leadership would bring changes favoring for-profit colleges. Multiple attorneys general appealed to Betsy DeVos as early as February to maintain the full borrower defense rule.
Naturally, the opposition to such a move is strong and outspoken. Critics said such a move would protect only the interests in the for-profit sector, and others surmise that the current administration is protecting those interests. Whatever the intentions, for-profit college stock values still rose in the market following DeVos’ nomination.
At any rate, the development is surely disappointing for a student who is left straddled with student debt from attending a defunct for-profit school. Even back in March, a large group, 40 percent, of student loan borrowers already had a negative view of Betsy DeVos.
The previous Borrower Defense Rule was put in place during the last months of the Obama administration. The policy would have taken effect in July 2017. It came hot on the heels of heightened awareness of risky and potentially fraudulent for-profit programs.
image copyright © Gage Skidmore