Senate Overturns Student Loan Forgiveness Rule

Betsy DeVos, the U.S. Secretary of Education

Education Secretary Betsy DeVos (AP Photo/Alex Brandon)


The U.S. Senate overturned a major student loan forgiveness rule.

Here’s what you need to know.

Student Loan Forgiveness

The U.S. Senate voted 53-42 to overturn a new student loan forgiveness rule introduced by U.S. Secretary of Education Betsy DeVos that critics argue limit student loan forgiveness for students when a college closes due to fraud. All Senate Democrats and 10 Republicans voted on a bipartisan basis.

The Obama-era rules, known as borrower defense to repayment, allow students to have their federal student loans forgiven if a school employed illegal or deceptive practices to encourage the students to borrow debt to attend the school. Without these rules, students are potentially on the hook to repay federal student loans even if they didn’t find gainful employment or finish their degree before their school closed.

Betsy DeVos: My Student Loan Forgiveness Rule Would Save Taxpayers $11 Billion

DeVos has argued that the Obama rules made it too easy to receive student loan forgiveness, and therefore new student loan forgiveness rules are necessary to save taxpayers $11 billion. Rather than make student loan forgiveness automatic, DeVos said borrowers impacted by school closure would need to apply for student loan forgiveness and prove financial harm. The new rule also would have potentially limited the amount of student loan forgiveness that defrauded students could receive.

Judge’s Order

A federal judge previously ordered DeVos to comply with the borrower defense rule. However, rather than comply with the judge’s order, the Education Department instead did the following, according to the Project on Predatory Student Lending at Harvard Law School.

  • “The Department demanded incorrect loan payment from 16,034 students
  • Of those students, 3,289 student borrowers made one or more loan payments because of these demands, which they were not actually supposed to pay
  • The Department has still not confirmed that 1,147 students’ loans are in the correct status, leaving those students in limbo
  • The Department has harmed the credit of 847 non-defaulted students
  • The Department subjected 1,808 students to involuntary debt collections (garnished their wages or taken their tax refunds or benefits)”

Next Steps

The next stop for the borrower defense rule is President Trump’s desk for signature or veto. In the mean time, make sure you understand all your student loan repayment options, all of which have no fees. You can explore:

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